While chancellor George Osborne may have spent much of his time recently fending off both personal and professional criticism, he has enough to deal with when attempting to manage a decline in UK economic growth. Having recently announced huge downgrades to the nation’s growth outlook and revealed higher levels borrowing, he also courted controversy with a tight and largely polarising budget.
There was good news for small business-owners, however, who have been afforded tax relief and lower corporation charges. This has encouraged many independent entrepreneurs to consider their growth plans for the future, as they look to invest their profits and optimise these for long- term gains.
3 Top tips for investing Business Profits
Investing commercial profits is an endeavour that is fraught with both opportunity and risk, however, so you will need to consider the following tips to protect your venture and make the most of your success: –
Consider your objectives and appetite for risk
In many ways, investing commercial profits is similar to making a commitment with your own capital. The only difference is that your trading capital is essentially leveraged against your business as an asset in this instance, meaning that there is a greater need to balance your appetite for risk and implement actionable risk management measures. It is also important that you manage your expectations regarding returns when comparing options in the marketplace, as you calculate the risk to reward ratio and invest in vehicles that protect the equity in your business and its first growth as major priorities.
Choose Reliable Investment Vehicles that deliver viable returns
With your approach to risk and reward having been carefully defined, the next step is to target specific investment options for your businesses profits. Take the type of stocks and shares ISA products made available through the IG platform, for example, as these are relatively low-risk options that are commission-free and deliver reliable, tax-free returns.
Interestingly, these investment accounts also offer superior rates and conversion fees for international shares, enabling you to expand your portfolio of options and ultimately optimise your returns.
Diversify and consider investing your business profits in real estate
Diversification is a universal rule of investment, and one that can benefit business-owners as much as individual traders. By investing outside of your business market and varying your portfolio over time, you can minimise the risk of industry and market-specific downturns.
In the current market, one of the best investment options for corporations is real estate. This market has experienced incredible growth in the UK in recent times, while the proliferation of more affordable regions outside of the capital has made the sector more accessible to smaller businesses.
This is a highly lucrative market, and one that may well continue to grow exponentially over the course of the next few years.
Disclaimer: This article is for information purposes only and is not intended as financial advice. Mum’s the Boss is not qualified to give financial advice and all readers are recommended to seek the advice of a suitably qualified professional before making investment decisions.