When you have excess money from your business you need to consider the following 5ways to invest it smartly on you business growth:-
1. Opening a Saving Bank Account
Bank accounts are the safest and most flexible way to invest money and they offer interest for the amount you deposit with them from your business. The advantage of investing in banks saving accounts is the freedom to withdraw the money anytime provided the minimum amount is maintained. This kind of investment is ideal for a business due to the frequent need of cash to buy stock.
2. Investing in Bonds
Bonds are usually issued by government and private companies. You provide a loan to the government or the private company when you buy a bond and in return you earn a fixed interest as per the coupon when the maturity period is due. Treasury bonds issued by the government are risk free investment options as they have a guaranteed yield although it is low. Bonds issued by private companies are riskier to invest in as their return depends on the performance of the company issuing them. However, they have a higher return than those issued by the government. Treasury bonds are always the best to invest in but they have a longer maturity period.
3. Investing in Stock Market
Stock market investment is the riskiest option of investing money although it has the potential for having the highest return. Stocks can be defined as units of shares that signifies holding in companies and can be bought by other institutions or individuals. Stock markets can give returns of 10 to 12% annually, however, the forces of supply and demand determines to a great extent these returns in addition to other factors from international and national events. Stock market has various options available for an investor depending on the finance available.
4. Stock Trading
Trading stock is the purest form of trading available but it requires patience, skill, Sheer guts as well as insights. This is not for arm chair investors or the faint in heart who may be joking about investing. Stock trading needs you to have enough capital when venturing in it. Always invest what you do not need immediately in your business and spread your risk. You should stick to blue chip stocks for long term return while maintaining a margin of safety when purchasing and a chance of book profit while selling.
4. Forex Investment
Forex or foreign exchange is one of the best methods to invest money from a business although it can be a little risky for starters. For you to invest in this market, you need to learn how to interpret the trading trends and be able to forecast the buying power of various currencies you want to invest in. By looking at market turnouts, value comparison as well as the historical trends of these currencies, you will increase your probability of buying currencies that are going north and those that will yield profit in the future.