Smart Business Investments: How To Invest Revenue From Your Business

By John , content writer Wednesday, 28 June 2023

India is predicted to be the world’s fastest growing e- conomy in the next three years, with an impressive growth of 5.9% expected in 2023-24, the International Monetary Fund reveals. While that’s certainly great news for business owners, it’s still important to strengthen your finan- cial position as much as possible in order to we- ather any financial do- wnturn that may occur. By taking steps to put some of your business profits into carefully-considered investments, you’ll increase your odds of boosting your revenue, and remaining strong during any market downturns.

Get a clear picture of your finances

Before you start making investments, it’s important to get a clear picture of your business’s finances. How much can you realistically afford to invest? Above all, never invest more money than you can afford to lose. And, your emergency fund, along with the money set aside for taxes, should also always be off limits. However, keep in mind, you don’t necessarily need to invest a lot of money to make your efforts worthwhile. In fact, people who embrace a drip-feed strategy by regularly investing small amounts on an ongoing basis typically have equal or even better success than investors who inject one huge sum into the market. Similarly, it’s also important to maintain a long-term approach to investing. Be prepared to hold your investments for a minimum of five years. This way, you’ll have the time needed to ride the ups and downs of the stock market, and maximise your growth potential.

Invest in silver and gold

Investing in precious metals like silver and gold can be a lucrative move. Gold and silver are generally considered to be stable investments, hence you’ll often hear them referred to as “safe-haven” assets. Both these precious metals can be useful during periods of inflation – levels of inflation have risen all over the world in recent years, but are fortunately expected to stabilise in the next couple of years. So, for example, the value of stocks typically drops during times of inflation, while precious metals, on the other hand, typically remain close to the same price – making them a safer investment.

Additionally, it’s also easy to sell gold and silver as both these precious metals maintain their value over the long term. Once you’re ready to sell your investment, very rarely will it now be worth less than what you initially bought it for. And, since gold and silver are popular across the world, it’s never difficult to find a market with eager buyers. In particular, storage is a key consideration when investing in physical gold and silver. You can either pay for professional third-party storage, use a bank, or invest in your own safe. Whichever storage option you go for, keep in mind, it’s important never to store gold and silver together; doing so can cause the metal to tarnish.

Don't put all your eggs in one basket

Not putting all your eggs in one basket means maintaining a diverse investment portfolio. Rather than just being an afterthought, this step is essential for minimising your exposure to risk. So, take time to ensure you’ve invested in different companies, industries, and geographic regions. It’s also important to maintain a diverse mix of assets, like stocks, bonds, cash, precious metals, and shares. Index funds, in particular, are a useful way to diversify your portfolio. For example, purchasing a mutual fund or exchange-traded fund exposes you to the performance of many different companies and industries with just one trade. Not only is this strategy low cost, but it’s also relatively easy as it eliminates the need for you to build up a portfolio and monitor the various companies you’re currently exposed to. The S&P 500, for example, represents many of the best companies in the United States, and allows you to easily own a stake in hundreds of stocks. It’s a popular investment that generates an average return of 10% annually.

Alternatively, cash is another useful way to diversify your portfolio, yet it’s a strategy that can sometimes be overlooked. In fact, smart investors may ensure at least 20%30% of their portfolio is made up of cash. Ideally, it can be worthwhile building a cash-based emergency fund, in particular. So, if you ever find yourself short on funds, you’ll have a safety net instantly available to access without necessarily needing to sell any of your investments.

Investing your business profits can be a lucrative move that generates extra revenue even during potential market downturns. By starting with a clear picture of your business finances, investing in gold and silver, and creating a diverse portfolio, you can increase your chances of creating a strong portfolio that performs well in the long term.

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