Short-Term Investment Options: A Beginner’s Guide
People invest money to grow their wealth and fulfil their long-cherished financial goals. There are many investment options in India, such as mutual funds, bank deposits and government schemes. People deposit their hard-earned money into these investments according to their risk profile and financial requirements.
Many investors prefer short-term investments as that helps them make money quickly. Invoice discounting investment is one such option. This is a beginner’s guide that would help people learn essential details about it.
Short-Term Investment Options
Short-term investments are those that can be liquefied easily within a maximum of 5 years. Most people invest in these options due to their low risks and ability to provide higher returns compared to bank deposits.
Let us take a look at some of these options:
Investment in Gold
Investors can consider opting for digital gold investments through ETFs (Exchange Traded Funds) and mutual funds. This is a popular short-term investment option because of gold’s high liquidity.
Mutual funds investing in securities with residual maturity of 91 days are called liquid funds. Short-term investors, who want higher returns compared to bank deposits, often consider this option.
Fixed Maturity Plans
People who wish to opt for an investment tenure of 1 – 5 years can opt for FMP (Fixed Maturity Plans), which invests in bonds whose residual maturity is well-aligned with the duration of this close-ended plan.
Benefits of Investing in Invoice Discounting
Invoice discounting is a short-term credit facility that allows borrowers to get cash against unpaid invoices. KredX, India’s leading invoice discounting platform, offers investors the opportunity to directly offer credit to businesses and receive returns within two months. If they keep reinvesting the returns from previous investments, they’ll be able to earn higher returns annually.
Discussed below are some of the benefits of invoice discounting investments:
Safe Investment Option
This financial instrument does not involve any execution risk because the borrower has already provided a product or service to the seller and raised an invoice against it. The investors can invest in their preferred invoices through the fintech platform.
Maintaining a well-diversified portfolio is mandatory for successful investments. Invoice discounting is an unconventional investment instrument that promises portfolio diversification and high returns at minimal risk.
Reduction of Effect of Market Movement
This alternative investment option reduces the effect of extreme market movements on an investor’s portfolio. This feature makes it a beneficial investment instrument with regard to market volatility.
KredX conducts a thorough risk analysis for every business borrower at multiple stages to determine their ability to repay the invoice amount. Moreover, its system verifies every invoice before listing them on the invoice discounting platform.
Investors can receive annualised returns as high as 15% at relatively low risk. This is a significant benefit, especially when one compares it to the other investment options.
Why Should You Choose KredX for Invoice Discounting Investment?
With advanced technology at KredX, investors are promised a smooth and hassle-free investment experience. Listed below are essential features:
- Fully digital investment experience
- Professionally managed end-to-end investment option
- A customised dashboard providing details of the portfolio, current deals and fund management options
With the KredX Invest app, investors can now track their investments whenever they wish to and seek support from the customer service team whenever they need it.
The increasing popularity of invoice discounting investment is due to its ease of investing. Fintech service providers have come up with various alternative investment options which require less documentation and offer higher returns than traditional financial instruments at lower risks.
1. An Individual resident investors
2. HUF / Proprietorship registered in India
3. Institutional investors
4. Banks, NBFCs and other Financial Institutions
5. NRI (Provided you have an NRO account and comply with basic predefined KYC guidelines, i.e., PAN card and valid Indian address proof)"