Happy to share these two passive income ideas.
Here, the ticket size is just around 2 lacs (or multiples of that). Also, these investments are liquid. i.e. you can buy and sell these investments via stock exchanges.
The first idea is IRB InvIT. InvIT stands for investment trust. This InvIT is holding 4000 kms of toll bearing highways in India. When you hold a unit of IRB InvIT, you own a part of these highways. Every quarter, the InvIT pays back the cash generated net of expenses. In the last 4 quarters, they have paid out Rs 1.8 /Rs 1.5/ Rs 2 and Rs 2.5 per unit – a total of Rs 7.8 per unit. IRB InvIT units can be bought currently at Rs. 54 in BSE. Assuming that they pay similar pay outs this year – by investing Rs. 54, you get a return of Rs 7.8 which comes to a yield of 14.4%. As per rules laid out by SEBI, you cannot buy just one unit – you have to buy a lot size of 2500 units – which means an investment of 1.35 Lacs or multiples of that.
The second investing idea is Indigrid – this is also an investment trust that holds power transmission lines. By holding a unit of Indigrid – you own a part of this asset. The cash flow generated by this power transmission service is paid back to the unit holders. In the last 4 quarters, they have paid out Rs 3 /Rs 3/ Rs 3 and Rs 3.1 per unit – a total of Rs 12.1 per unit. The price of this Indigrid InvIT currently is Rs 128 per unit at NSE. Assuming that they pay similar pay outs this year – by investing Rs. 128, you get a return of Rs 12.1 which comes to a yield of 9.4%. If you invest in Indigrid, you have to buy one lot of 1701 units – which means an investment of 2.17 Lacs or multiples of that.
InvIT or Infrastructure Investment Trust is a collective investment scheme similar to a mutual fund, which enables direct investment of money from individuals and institutional investors in infrastructure projects to earn a small portion of the income as return. Just like MF’s, these are regulated by SEBI.
The main risks here are:
- the unit price goes up or down just like stock prices in the stock market and so if you end up buying it at a price that is high, you will lose principle amount over time. (But right now this factor is favouring the investor as the prices are down and the yield is high).
- the trusts hold certain assets (like highways /power lines etc) and these have to generate the cash every quarter. If there is a problem and these assets stop earning (for example the farmers stir has affected the tolls in Haryana and Punjab), then as investors, your yield can go down.
I like this idea of passive income and I have invested in IRB InvIT.
Remember – this is not a recommendation, and you need to do your own research before investing.For further research – please look at these sites.
Please write to me at firstname.lastname@example.org if you want any clarifications.