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Technological advancements have altered the way we live today. Innovations in the financial world have occurred at the same rate. We can now invest money at breakneck speed. Because of technological advancements, product offerings have undergone a sea change. Financial products and services that were previously only available to institutions or a small number of individuals are now available to retail investors via the internet. Individuals like us now have access to new products such as online lending, unlisted shares, bill discounting, bonds, real estate units, and so on.
Bill discounting is one such intriguing product that I will discuss further below. Bill discounting is the practice of a bank taking a borrower’s bill drawn on his customer and paying him immediately after deducting some commission or fees. The money is later realized by the bank on the due date. This product, which was previously restricted to a few institutions such as banks, is now available for us to invest in and earn returns ranging from 8 to 12% on platforms such as jiraaf.com.
Platforms such as Jiraaf act as an online vendor, performing all due diligence for the companies that list such bills. The platform invests the entire amount on their books and then later allows us to invest in such products, earning a nominal return. Or, on occasion, allow us to invest directly in the bills. In either case, we can expect to earn 8 to 12% per year. Bill discounting is a short-term finance product wherein the money is invested for a shorter duration (2-6 months) and then redeemed quickly.
Bill discounting goes live on the platform and frequently closes in a short period of time. You can choose to receive an alert or stay in touch with a financial advisor who can keep you up-to-date on such opportunities on a regular basis. Bill discounting provides slightly higher returns than FDs or debt funds and, while not entirely risk-free, carries a very low risk. On such platforms, the KYC process is relatively simpler and smoother. Such investment opportunities are ideal for investors with a low or mediocre risk tolerance. The platform currently does not have a reinvestment option, which would have allowed us to compound our money.
However, the company is working on it.
You can always do your own due diligence before investing in such products, or you can contact your financial advisor for more information.
I only discussed one product in this blog, but I plan to discuss more interesting products in future blogs.
Keep sharing your feedback on the same.
About the Author :
Nitin Bhandari, a passionate & certified research analyst with over 15 years of experience in Equity Markets and founder of Heet Investment, a financial broking firm in Bengaluru. You can get in touch with him on nitin@heetinvestment.co.in