Invest A Portion of Your Small Business’ Profits!
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Every small business owner aims to generate a profit.
Sure, breaking even could keep your company afloat.
But, the majority of us set small businesses up in order to earn sufficient money to provide ourselves and our nearest and dearest with a good quality of life.
Sure, you should use some of your profits for the things you want – whether this happens to be consumer goods, experiences, or getaways. But you shouldn’t regard all of your profits as purely disposable income.
You should be wise and save and/or invest a portion of your profits. Saving means that you have funds to fall back on if you hit hard times or have to fork out for large business-related purchases, such as replacement equipment and machinery.
However, saving is relatively self-explanatory. You simply open a savings account, deposit money into it, and then leave it there.
However, investing can be a little more complex.
So, let’s take a moment to focus on it.
DON’T GET INTIMIDATED
Investing tends to come hand in hand with a host of jargon.
You will have to familiarise yourself with things like stocks, shares, and historical options data. But don’t feel intimidated by this.
So many people back off from investing their money because they don’t understand every aspect of it straight off the bat.
If you have patience, however, and spend a little time researching what you’re getting into, you’ll soon know what the whole deal is about and you can profit from this!
The first type of investment that you might want to try out is reinvestment in your business.
While your business may well be generating a lot of profit at the moment, you need to recognise that there is always room for improvement.
Reinvesting money into your company can help you to achieve this – constantly pushing your business further and further forward to a better future.
Consider bringing your outsourced work in-house. This is a great place to start!
STOCKS + SHARES
Stocks and shares tend to be the most common form of investment.
When you buy shares of a company, you gain a claim over a portion of one of two things:
- The company itself
- The company’s profits (this is known as “dividend shares”)
The first form of investment means that if the company were to sell up, you’d find yourself with a portion of the final sum it was sold for.
If you invest in dividend shares, your given share of profit will be deposited into your account as it is generated.
Another form of investment is CFDs.
There are various different trading markets out there and CFD is essentially a hybrid market of the stocks and shares, forex, and options markets.
Remember that when you engage with CFD, you’re not buying anything tangible – you don’t own the assets you’re trading in.
Instead, you are agreeing to exchange the difference in different assets. These could be stocks, foreign currency, or options during a specific contract period.
As you can see, investment is important and you have a host of different choices on your hands.
So, take your time and make the right decision for you and your business!
Do you invest a portion of your small business’ profits? Comment below!
[a contributed post]