- To help you out, here are some of the overlooked yet profitable investments a growing business can't afford to ignore:
One of the many ways businesses increase their assets is by investing in people and equipment to ensure that those within the company sustain growth. As cash flow increases, business owners may even consider looking beyond to include investments that can provide a steady source of passive income. Investments can also be long-term and serve to secure the company’s future.
When looking for ideal business investments, owners often look to reliable investments in the form of stocks, bonds, and mutual funds. While these make sensible options, other types of investments can help businesses profit, especially in times of uncertainty. Alternative forms of investment, in the form of precious metals, emerging technologies, and specialized real estate, are lesser-known types of investments.
Take note that new businesses have to be frugal and limit their budget to absolute essentials. However, as your business grows and your cash flow increases, you should start scaling investments for the future. To help you out, here are some of the overlooked yet profitable investments a growing business can’t afford to ignore:
Historically, gold has and continues to hold value, often running counter to fiat currencies. Since its value increases when other assets depreciate, it’s a suitable form of financial protection. It’s also considered one of the most effective diversifiers of an investment portfolio or in your retirement account.
Businesses can invest in gold by buying gold-company stocks and participating in mutual funds or ETFs. These investments allow investors to track gold indexes and their own assets without purchasing or storing them.
2. Special Real Estate Investment Funds
Real estate is considered one of the most profitable investments of all time. The value of the real estate increases over time, and it’s one type of investment that investors often include in their portfolio since it adds both income and growth potential. While these are common additions, Real Estate Investment Trusts (REITs) are investment types that investors often overlook.
Real estate investment trusts (REITs) are companies that manage and operate various real estate assets. They typically manage residential, commercial, and industrial properties, while special REITs hold properties such as farmland, records storage, billboards, casinos, gaming, entertainment venues, education areas, and even manage prisons. REITs often form a group of more or less 100 stakeholders and operate similarly to LLCs.
REITs, most especially specialty real-estate investments, provide interesting opportunities for passive income to your business. They also pay considerable dividends that can qualify for an income tax deduction.
3. Peer-to-peer Lending
P2P (peer-to-peer) lending platforms allow people, even those with bad credit, to borrow money from peers (investors) who have money. Investors then screen their applicants based on their risk rating, and ensure their repayment ability by considering financial details such as employment status, income source, social media accounts, and even smartphone use.
Businesses with considerable cash flow can consider entering into the P2P venture as this can provide returns. Borrowers can borrow small amounts, and investors can earn by imposing interest rates between 6% to 30%, depending on the loan’s amount and duration. Be sure to pick a trustworthy borrower, as you’ll want your accrued interest to become paid interest over time. What is accrued interest? It’s the amount of interest your investment earns before collection.
4. Blue Chip Stocks
Stocks are often considered as mainstays in an investment portfolio. While this holds true, business investors often overlook blue-chip stocks or stocks from well-established companies. This strategy of stock investment is beneficial for a business in several ways.
For instance, it pays dividends in cash and tends to increase over time, making it an ideal source of added income to your business. Additionally, it’s also advantageous because these companies are found in essential industries such as utilities and energy, consumer goods (food, beverages, and household products), technology and communications, healthcare, services, and industries that specialize in automation and logistics. These industries are always in-demand to the point that investing in companies involved in any of these may provide substantial returns for your investment.
Investments are a surefire way to increase assets and holdings. Growing businesses can venture into investment opportunities that are often overlooked because of unfamiliarity or the fear of too much risk.
In reality, all investments have inherent risks. It’s only a matter of choosing the types of investments that can give substantial returns no matter how obscure they may be.