As a business owner or entrepreneur, it’s likely that you’re already plugged into the world of investment. Running any sort of business is in itself an investment. You’re likely to have put in lots of time, and potentially even some of your own capital. However, it’s always wise to think carefully about your investment portfolio as a whole, and look at diversifying it where you can.
While it’s not pleasant to think about your business potentially suffering in the future, it’s definitely true to say that markets chop and change – and having a wider investment portfolio to fall back on in case of a change in the future, is a smart move. Even if your own business is succeeding, having a diverse investment portfolio is a good way to enhance your wealth and ensure that your financial future is secure. Here’s how you can take steps towards making that dream a reality.
The simplest way for a business owner to benefit from investing is to take some of the profits they have made from their business and invest them themselves. There are several options in this regard. If you feel comfortable, knowledgeable and time-rich enough, you could construct an investment portfolio of your own, focusing perhaps on stocks and shares, or alternative assets such as cryptocurrencies. This can lead to big rewards if it goes well, and can in some cases mean lower fees, as there’s no external manager involved – but it also requires a fair bit of expert knowledge and a big commitment.
The other way to do it is to go for a managed fund. In this scenario, you essentially pay an expert to manage yours and many other investments in the form of a fund. This can be expensive, but it can also allow you to ‘set it and forget it’ to some extent. There’s no guarantee of profits, but it can be an easier way to make returns without having to be hands-on. Business leaders are, after all, often very time-scarce.
Personal or business?
Beyond DIY investing of personal profits, there’s also a range of more complex business investment options to choose from. As a business owner, you’ve essentially got two identities in the eyes of the investment world. You exist in part as a private individual who benefits from the firm’s existence by taking profits out of the business, and also as the leader of the business and the custodian of its best interests. This responsibility, of course, extends to ensuring that every dollar your firm earns is put to good use. Not only does this benefit you as a private person, but it also benefits any fellow owners and, in the long run, your employees.
One way to safeguard your business’ interests and increase its investment power is by doing something with any cash you have in business bank accounts, without taking it out to invest yourself. There are many reasons why business owners might choose to keep cash in the bank. They may be waiting to settle a long-term invoice, for example, or hoping to put it towards a new stock purchase. However, every day it remains in the bank is another day in which it loses its value, and investing it before it is needed could help you defend your business’s money against inflation.
It is, of course, a risk to invest business cash, especially if the timeframes involved are short term and there is no chance for the market to bounce back if the cash is ever needed in the event of a downturn. However, the rewards can be strong. And in an environment of hyper-low interest rates, there is also a risk involved in leaving cash sitting in the bank, as it could mean that inflation eats away at it. Balancing this risk-reward question is something that an expert professional can empower you to do.
Get some professional help
If the options seem a little overwhelming, or you’re uncertain exactly which routes are likely to work best for you, the best thing to do could be to go to an expert professional and see what they say. This way, you can keep your focus firmly on your own business and leave the investment to an expert. Capital Markets Elite Group, which provides stock trading services for people at various different levels of a trading career, can offer a helping hand here. The firm offers both risk management technology and expert advice, so you can use it to build your investments in a way that you’re comfortable with.
Ultimately, there are plenty of options out there for those who are thinking of opening up an investment sideline alongside their business. Whether you decide to DIY invest your profits as an individual or invest your business cash as an organization, a professional can help you make the right move for your circumstances.