As a business owner, you work hard for the money that you earn. As a business in the tourism or retail sectors, you may expect the upcoming April holiday season to be a busy and financially rewarding period.
After this exciting and demanding time, the question then arises as to what to do with these excess funds. In order to create wealth for your business, you should invest your profits – not only for the business, but also for your own financial security.
Investing does not need to be a complex process; you just need to get the right solution for your needs. Here are a few tips:
First, decide on your investment time period. This can range from short term (<1 – 3 years), medium term (3 – 5 years) and long term (5+). The time frame that suits you, will determine the types of investments that you could consider.
Risk vs. Reward
Next, you need to decide how much risk you are willing to take, versus the return you will be getting.
Another important factor to consider is whether you need access to your money. You may want to consider a lower return, with an investment account that provides you with quicker access to your funds. Or, if you do not need the funds for the foreseeable future, you can consider a longer-term investment. The ease with which you can access your funds is known as liquidity.
There are also minimum deposit requirements linked to certain investment accounts. Don’t be scared off from investing because you feel that your amount it too small to invest – you can invest from as little as R1000. Remember to factor in the fees that you will be paying when choosing an investment product. Certain investment accounts do not charge monthly or transactional fees, while others do.
These are just four tips to consider when you start to invest for your business.
This advisory has been issued by Lwazi Stuurman, Communications Manager at First National Bank – an authorised financial services company. For more information visit www.fnb.co.za or email [email protected]