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  • Highlights

  • Opt for company FDs for attractive returns

  • Choose liquid funds for their low risk

  • Go for equity-linked saving schemes for tax benefits

  • Invest in fixed maturity plans for better post-tax returns

Nothing beats the thrill of starting your own enterprise and heading something you’ve created. However unique your start-up idea is, no venture takes off without wings. While ideation covers only one half of fulfilling your start-up dream, actually putting it in place is what matters. Substantial finances that can help implement what you have envisioned are absolutely essential. Even before you put your business blueprint in place, these 5 investment schemes can ensure that you are financially prepared to start your entrepreneurial journey.

Short-term company fixed deposits

Short-term company FDs are a good way of parking your surplus money, which you can use as seed capital to nurture your start-up. Company FDs usually offer a higher interest rate and are also easier to start. You can choose non-cumulative FDs to help you periodically pay your start-up expenses. However, start by investing the surplus money in company FDs which can later be used to supplement your day-to-day operating capital. Bear in mind, however, that not all company FDs are alike.

Besides looking at their safety ratings, you should also make it a point to know the background of the company. For instance, Bajaj Finance Fixed Deposit carries the hallmarks of trust and efficiency and gives you assured returns along with flexibility and convenience.

Liquid funds

Liquid funds are a good way of meeting the short-term goals of your enterprise. These goals could range from something like getting new office furniture to paying the daily wages of your workers. Liquid funds are considered a safe bet to park your start-up money. A large inflow of cash from your enterprise could be diverted to a liquid fund which can then be routed to equity-linked investments to yield higher returns. Although liquid funds are the least risky of all debt-related investment, they also have disadvantages. One major drawback is that their moderate returns may not beat inflation.

Equity-linked savings schemes

Equity-linked savings schemes typically have a lock-in period of three years. These schemes let investors enjoy tax benefits under Section 80C of the Income Tax Act. This tax-saving component makes an equity-linked savings schemes a great investment vehicle for entrepreneurs as they can use the tax-benefits to further their medium-term business plans. It is ideal for entrepreneurs whose start-ups are in the gestation stage. Although such schemes have often generated inflation-beating returns, they are subject to market risks.

Mutual Fund VS Fixed Deposit || Which is Better Option for Investment | Bajaj Finance

Fixed maturity plans

Fixed maturity plans invest primarily in instruments such as commercial papers, company bonds, and money market instruments. No matter the holding period, these plans are said to be a great boon for entrepreneurs as they are said to yield better post-tax returns in comparison to other instruments. However, fixed maturity plans have a flip side too in the sense that they levy fund management charges and therefore, the final rate of return may not necessarily justify the investment.

Secured debentures

Debentures are bonds issued by companies as and when they want to raise working capital either for expansion of their existing businesses or to diversify into new ones. Debentures can either be convertible or non-convertible and secured or unsecured. Secured debentures are those wherein investors are assured of both, their interest and principal either through cash or bonus stocks. Partially-convertible debentures are a viable way of funding your start-up. All debentures whether secured or unsecured, convertible into equities or not, carry an inherent risk even though they yield relatively good returns. They are not backed by any collateral or guarantor and can only be trusted based on the reputation of the company or authority issuing them.

Parking your surplus funds in the right instrument can make all the difference to your start-up by providing high returns which in turn can be used for your business requirements.

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