In my search for Financial Independence, I constantly test and evaluate new avenues for investment and earning passive income. Here is a detailed review of Gripinvest, an investment platform that allows you to buy stake in physical assets that are then leased to the likes of Furlenco, Uber, DrinkPrime etc.
What is Grip Invest?
The concept is very simple. Companies like Furlenco, Uber require physical inventory such as cars or furniture. They can put up their own money or they can borrow from the bank to buy these assets.
The other alternative is Gripinvest. Gripinvest allows investors like you or me to buy a percentage of the assets that an Uber or DrinkPrime will require. Then Grip Invest leases these assets to the companies which will further rent them or use them to make money.
How does GripInvest work
Here is how Gripinvest works, using Furlenco (furniture rental company) as an example
- Furlenco needs furniture: Furlenco needs new beds to rent out to it’s customers in Mumbai. It reaches out to GripInvest for a total of Rs.20 Lakhs worth of furniture
- GripInvest raises capital: Gripinvest raises capital from investors on it’s platform, promising a certain percent of returns to investors who give money to purchase the beds for Furlenco
- Beds are bought: Using the Rs.20 lakhs raised on Gripinvest, the beds required are bought and added to Furlenco’s inventory to be rented out
- Rental income: Furlenco starts renting out the beds and receives money from those who take these beds on rent
- Monthly payment to investors: For the remainder of the investment period (usually 2 to 3 years), the investors are paid a certain sum for their investment.
- Sale of beds: Once the investment period is over, the beds are sold (or bought back by Furlenco) and the proceeds from the sale are distributed back to the investors. At this point, the investment is considered as matured and closed.
How to invest in Grip Invest?
It is very easy to start investing on Gripinvest. Here is how you can do it.
Time needed: 1 hour.
- Check you Eligibility
Check if you are eligible first. You need to be above the age of 18, and have a valid PAN card and Aadhar card to start investing.
- Create an account
Setting up an account is very easy. Just enter your email address, personal details and you are all set.
- Provide KYC Documents
Next to verify and provide your KYC documents. In the settings section, there is a KYC tab. Submit your PAN card and Aadhar cards there. Once submitted, someone from the Gripinvest team will verify these before approving them.
- Connect your bank
You need to connect your bank to be able to add money to invest and also receive the monthly payouts from them. This can be found under the settings section below KYC.
- Select an asset to invest in
Once KYC is approved you can start investing. Now there are multiple assets that are available, pick the one that meets your needs.
- Invest and start earning
Now simply invest the amount you have in mind in the asset you selected. Post this you will be receiving the monthly payout to the bank account you linked above.
There are a couple of criterions to keep in mind when choosing an asset on Gripinvest to put your money in.
- The company taking the assets. This can be furniture rentals such as Furlenco, Rentmojo. There are water purifier rentals such as Drink Prime, then there are fleet rentals (renting cars and other vehicles) such as Zypp, Everest (key partner to Uber) and more.
- The Return on Investment. The returns vary from anywhere between 20% to 25%. These are pre-tax. So in reality after all deductions, you get anywhere between 7% to 9% returns per annum post Gripinvest paying the taxes on your behalf. Read on for more details
- Duration. The duration of the investments vary from 2 years to 5 years.
Minimum and maximum investments
The minimum amount you can invest on Gripinvest is Rs.20,000. There is no maximum amount mentioned, this will possibly the total amount that is required for the asset you plan to invest in.
How much is the return on investments in Gripinvest?
This happens to be the million dollar question. When you look at it for the first time you drool at the 20% returns Gripinvest promises you. Then, that is not the true picture.
Gripinvest provides you the returns after deducting their fees and taxes. This is with the logic that the profits are that of an LLP and as per Indian Taxation laws, a partner in an LLP (what you become when investing) need not pay tax on the profits earned. In reality the profits are paid by the LLP and the remaining is paid to investors. Which effectively makes all returns you earn from Gripinvest post-tax and thus you need not pay tax on this income.
So this is how an investment works out to.
Example of an investment and it’s payout
Say you invest Rs.1,00,000 in an asset paying 21% interest for 3 years time.
|Tenure of Investment||36 months|
|Post Tax returns (tax @12.2%)||Rs.1,22,465|
|Avg.Monthly payout to investor||Rs.2,692|
|Promised Rate of Return for tenure of investment||21%|
|Actual Rate of Return post taxes per year||7.48%|
Monthly Payouts and Final sale of stock
The returns you earn are in two tranches:
You get a payment on a monthly basis throughout the tenure of your investment. This money is paid directly into your bank account.
Final Sale of stock
Once the investment period is over, the assets are sold in the open market or to the party who leased it. The proceeds from the sale are distributed among investors. Note: This is already part of the total returns promised, so do not think this is an extra amount you will earn.
Are investments Tax Free?
This is may be in your best interest, or perhaps not. The income you earn from your returns on investment on Grip invest are tax free. You will not have to pay tax on this. Which means depending on which tax bracket you fall, you may be able to save up to an additional 30% on these investments.
This entirely depends on individuals and their needs. On the plus side,
- you can diversify your portfolio
- medium risk and less volatile investment
- regular monthly payouts
- tax free income to investors (as returns are given post-tax)
- returns that are higher than a fixed deposit
On the flip side
- The returns are decent compared to FDs and Liquid funds. Liquid funds giving 7% returns becomes 4.9% post tax. However Gripinvest gives about 7% post tax.
- Short term (2 to 5 year investment horizons)
- New company and business model
Some frequently asked questions
Your investment returns are paid monthly directly into the bank account you have linked to your account
At the moment, no you cannot. Looks like the team is working on bringing an open market which will allow you to do this in the future.