Mutual funds are emerging as a leading investment option for aspiring entrepreneurs. If you are planning to start your business using your own resources, mutual funds are a flexible alternative that offer good growth potential. Apart from the initial costs of registering your business and obtaining a license, your business would also need to invest in office space, staff and equipment. A well thought out investment strategy using mutual funds can help you meet both the short term and long term capital requirements of your company even after you break even.

Whether you plan on starting a freelance business or a small business, investing in mutual funds can help you avoid borrowing from the market and retain complete freedom over how you run your business.

Here are the types of mutual funds that can help you start and grow your business

Liquid Funds

If you have just started your business, short-term liquid funds can help you meet the day to day working capital requirements of your company. A key benefit of liquid funds is that they do not have a lock-in period and allow you to redeem your investment at any time of your choosing. Liquid funds have a maturity of 91. These funds invest in low risk assets such as government bonds and generate returns ranging from 7-8%.

There are no penalties for early withdrawal, which makes it ideal for your short term capital requirements.

Hybrid Funds

Hybrid funds offer risk reduction through diversification and assured returns. If you’ve been in business for six months or more, this type of fund can offer a combination of wealth building and short-term income, ideal for managing staff and production overheads as well as expanding the business eventually.

Hybrid funds generate better returns and are less risky than regular equity funds. They help a business owner hedge against market volatility and ensure that business operations continue to run smoothly.

As an investor, hybrid funds provide an optimum mix of stability and growth compared to other forms of investment.

Equity Mutual Funds

If you are fairly risk averse, investing in a large cap blue chip fund can help your business develop some serious financial muscle. These funds offer consistent returns over the long terms as they invest in Fortune 500 stocks, providing regular income for your business. These funds generate high returns by investing in shares of companies which lead the market in terms of capitalization.

Ideally, a combination of debt and equity is advisable for business owners to manage risk and generate strong returns on investment. Inflation, a dynamic regulatory requirement and changing consumer preferences require having a long term perspective when it comes to a self-financed business. In terms of reducing debt and improving business flexibility, mutual funds can give you the edge.

Explore Various Mutual Funds here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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