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Should You Fund Your Startup Dream With Your Retirement Corpus?

Mar 21, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

Understand the risk associated with a startup and chalk out a plan to fund it accordingly.

A startup requires a viable business idea, requisite work experience, and talented people to run it. The most important ingredient, however, is funds. Funding can come through an investor or a bank provided you have a detailed business plan. In case funding is unavailable, you may toy with the idea of using your hard-earned savings. Is it worth using your retirement savings to fund a start-up? Let’s find out why it could be a bad idea:


The first year of a startup may not generate any profit.  Perhaps, it may take a few years to reap in the benefits. Investing in a startup is a gamble that could either pay off or sink. Hence, investing your retirement funds on a risky venture is not advisable.

Withdrawal restriction

There are restrictions on premature withdrawal of a retirement fund like the Employees’ Provident Fund (EPF) and a Public Provident Fund(PPF).  You can withdraw funds from these systems for marriage, education and other defined purposes only. It does not allow you to withdraw from it prematurely to fund a startup.

Approach an angel investor to fund your start up. As your business grows, you will be able to share the profits with the investor. But it is imperative you plan for retirement while building your startup. It ensures that your retirement goals are unaffected while you are managing your startup.

Make use of the retirement plan calculator to arrive at the amount you need to save every month. The amount will depend a lot on your life style and monthly expenses.

Aegon Life offers a Unit Linked Insurance Plan (ULIP) known as the iInvest Plan that can help you with retirement. You can choose from 6 unit-linked funds containing varied exposure to equities. Funds with high exposure to equities can help you to grow wealth. Multiple top-up options allow you to contribute more premiums towards the fund especially if it is performing well. In case, your startup doesn’t do well, then the withdrawal option in the ULIP can provide some relief.  The iInvest Plan allows you to withdraw 20% of the investment after five years of investment.

Conclusion: Investing in a startup is risky. Therefore, you must avoid using your retirement fund to run a startup. Instead, use your retirement savings to invest in a ULIP offered by Aegon Life for better savings and peace of mind.

To know about AegonLife’s life insurance products like term insurance plans and other products like health insurance , visit our home page.


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