Nowadays, many businesses, both big and small, have difficulties staying afloat on an increasingly competitive market. It’s no secret that business growth and development requires a hefty investment. You cannot support that growth unless your business is performing exceptionally.
Many business owners come across growth or development opportunities even when their businesses haven’t reached peak performance or stability yet. However, in most cases, owners lack the resources to invest in those opportunities. With that in mind, they keep investing in market analysis, marketing, planning, and other strategies, in order to improve their business so that they’re ready when the next opportunity comes along.
On the other hand, other business owners are more decisive and are willing to identify new revenue streams or additional incomes to further speed up the entire process. These business owners consider investments, such as stocks, bonds and other opportunities that can help them maximize their profits. That being said, here are a few investments that bring your business to the top.
Investing in real estate properties
The real estate market is a great opportunity for business owners to capitalize on their investments. Properties are always on high demand and less volatility makes this market predictable to a certain degree. In other words, you could purchase a property and predict how its value will increase or decrease over time. There are four types of real estate properties for you to choose from:
- Residential properties â€“ houses, apartments and so on.
- Commercial properties â€“ malls, shopping centers, medical and educational buildings, etc.
- Industrial property â€“ warehouses, factories, manufacturing plants, etc.
- Land – vacant land.
Investing in real estate can yield multiple benefits for business owners. For example, you can buy properties when the price is low and sell them when the market price is high. This strategy is also called “flipping properties”. You can also buy properties when the prices are low and invest in renovations to increase the value of the property before the sale.
This method is good if you don’t want to wait for the market price to increase on its own. Last but not least, you can hold on to the purchased property and enjoy a rental income for as long as you wish. Renting properties also yields other benefits, such as tax returns and deductions, as well as mortgage interests.
Investing in stocks
The stock market is the most popular destination for all kinds of investors. The stock trade offers a wide variety of investment types that can suit your needs. For example, short-term, mid-term and long-term investment types can tailor to individual needs based on what you want from your investment and how soon do you want it.
Aside from having your company enter the stock market, in order to raise money, you can approach the stock market as an investor. In other words, instead of selling shares of your company you can buy shares of other companies and maximize the profits that you can later reinvest in your business or some other endeavor. Similar to real estate, you can buy and sell stocks or hold on to them to enjoy a dividend income.
The key to successful stock trade is in identifying a good opportunity, i.e. a company with growth potential. For example, “Tax Cuts and Jobs Act” in the U.S. has reduced the taxes from 28% for large-cap companies and 32% for small caps companies to 21% respectfully. On the other hand, the Australian Securities Exchange (ASX) is experiencing small company profitability growth, especially in small businesses that specialize in cobalt and lithium products.
These trends make small-cap stocks a profitable investment opportunity in not just the U.S. Simply put, the more you familiarize yourself with investment opportunities, the easier it will be to capitalize on them.
Bonds are an alternative to stock investments. Simply put, bonds are a form of debt obligations. In other words, instead of selling shares of your company to raise money, you take on debt by issuing bonds. Therefore, bonds are a type of loan you company can take to grow and develop further or improve business operations.
However, that loan will have to be rapid eventually with interest, of course. As with stocks, you can have your company issue bonds or you can invest in bonds issued by other companies. Even though bonds are considered a loan, they differ from traditional loans. A bank may issue a loan to a company making the bank itself the lender. But, with bonds, multiple investors take on the role of multiple lenders. Here’s an example of how bonds work.
A company issues a 10-year bond with an issue size of $10 million. An investor can purchase a corporate bond with a face value of $1000 and a coupon of 5% annual interest and maturity of 10 years. What that means is that the investor will receive $50 each year for the next 10 years until the bond matures and when they’ll get their $1000 back. If the coupon is semi-annual, an investor will receive $25 twice a year. In other words, bonds are appealing to investors because they’re referred to as fixed-income securities, due to their predictability.
Investing in currencies
The foreign exchange market, also known as forex or simply FX is the world’s largest financial market today. Each day, an average of $4 trillion worth in currencies is traded on the forex market making this the most liquid market in the world. For business owners looking to maximize their ROI fast, the forex market may be the right course of action. Forex market is opened 24/7 and currencies are traded in pairs, such as EUR/USD.
Simply put, traders or investors are betting that one currency will go down while the other will go up so they can be bought or sold based on current price or their exchange rate, which is why currencies are traded in pairs, to begin with. Also, thereâ€™s a close relationship between foreign exchange market and precious metals, so keeping track of gold price changes can offer valuable insight into market trends to forex traders.
Unlike the stock market, trading in currencies involves more risks because the forex market operates fast and it’s thus more volatile. However, a significant return on investment (ROI) can be generated in short time periods if you utilize the right strategy. Other benefits of the forex market that are similar to stock trade include:
- Currency options â€“ just like call and put options at stock trade, investors have the option, but are not obligated, to buy or sell a specific amount of foreign currency at the specific date and at the specific price.
- Trade products â€“ ETFs (Exchange-Traded Funds) and ETNs (Exchange-Traded Notes) are a way for investors to gain exposure to foreign exchange markets. These products can focus on a single currency only or focus on managing a group of currencies.
- CDs (Certificates of Deposit) â€“ Foreign CDs are focused toward individual currencies or a “basket” of currencies that allows an investor to earn an interest income at foreign interest rates.
Investing in stocks, bonds, currencies and such can easily bring your businesses to the top. With the right strategy in place, any business can gain significant profits or utilize a growth opportunity from their investments. However, every investment yields a risk but a good investor knows how to mitigate, as well as minimize those risks.