Listen to tips for invest money It is crucial in all entrepreneurship and business.
We can say that it is common for people, regardless of the work they do, to seek but with the concern of having to carry debts and high interest on loans to get it.
For entrepreneurs, knowing how to manage their money in a healthy way is even more important, considering the uncertainties that a can bring, mainly for beginning entrepreneurs.
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We know that when money is idle, easily accessible and without a specific destination, it is easier to spend it irresponsibly and unnecessarily.
Therefore, we are going to share some tips to invest money and be sure that, when you need it, you will have that value available (plus returns!).
Why should we invest the money?
Some investments allow you to commit a small amount to them, while others require a higher value to start.
With withdrawal, it works the same way. There are investments that you can withdraw at any time, such as savings, and others in which you will only see your money again after six months or a year.
If you investigate the market, you will see that there are investment options available for each entrepreneur profile, from the most insecure to the most daring.
However, it is not advisable to put everything you have (even a little) in a single investment.
As the financial market goes through many oscillations, mainly in more fragile economies, if you put all your money in one place, in the event of a crash, you can suffer a lot of damage or even lose all the value invested.
If you diversify your investments, in addition to ensuring that financial resources multiply, you can avoid dramatic losses if there is any negative variation in one of the markets.
How much of your money should you invest?
First, it is important to know that there is no minimum or maximum value to invest, the amount will vary depending on the type of investment and
However, there are some calculations you can do to come up with an amount that is ideal for reaching your goal.
Start by recording all your fixed, such as rent, financing, electricity bills, water, health plan, telephone, Internet, monthly bills, taxes or studies, among others. Do not forget to include the expenses generated by your company, such as the rental of the space (if applicable), the production costs and the payment of suppliers.
Record a cash flow value, the amount necessary to keep the company running, even if you are not yet generating as much income.
To carry out this control, you can use Excel, Google Drive or financial management tools available online.
After recording all of these expenses, consider whether you can set aside at least 10% of your monthly income to invest.
As we said before, this percentage is not mandatory, but if it is possible to invest a fixed amount per month, it will be easier to achieve significant results in 1 year.
What can you invest the money in? Know the types of investment
There are very diverse so we are going to present its main formats and explain what differentiates each one of them so that you can decide the best destination for your money.
When analyzing the advantages and disadvantages that each model presents, try to also observe which are the ones that best suit the needs. that you established for your venture.
1. Savings
Savings is one of the most common forms of investment, probably because it is available at any financial institution.
However, it has lost space compared to other options that, despite being a bit more complex, end up being more profitable for the investor.
To start, it is only necessary to find a financial institution with the required documentation in hand to open a savings book. From there, the investor can deposit and withdraw the desired value when needed.
Advantages of saving
- Have daily liquidity, which is exactly that practicality of being able to withdraw money at any time.
- It is exempt from income tax.
- It is a safe form of investment, since in several countries they offer a protection system for their funds for individuals.
- It has no charges.
Disadvantages of saving
- In some countries it may have poor performance.
- Despite being able to make withdrawals at any time, the investor receives the return only by leaving the money until the date the deposit is one year old or more, that is, once a year. If you remove it earlier, you lose all performance.
- For those who have difficulty saving, a daily liquidity resource like this can encourage unnecessary and early withdrawal of money.
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2. Term deposit
This investment option is a title issued by banks in order to raise money to finance their activities, such as investments or loans to third parties.
To simplify, we can say that, when investing in a time deposit, you lend your money to the bank and receive in exchange the interest payment of the operation, which can be pre or post-fixed.
In most cases, the longer the application period, the higher the valuation offered.
Advantages of term deposit
- Higher profitability compared to savings.
- In many countries it is also protected by credit guarantee funds, making it a safe investment.
- It has shorter grace periods in relation to other types of investment, which allows the withdrawal of money to be made after a short period from its application.
Disadvantages of the time deposit
- In many countries, the incidence of Income Tax suffers, with varied taxation according to the term of the investment.
- It requires a minimum initial amount, which can be difficult for those who are just starting out and/or are not yet sure what value to invest.
- Normally it cannot be withdrawn before 6 months.
3. Bills of exchange
Bills of exchange are a form of savings where the sum of money invested can be withdrawn on a certain date and whose yields depend on the market to which the value is associated.
One of its most common markets is real estate. However, in these cases, the investor “lends” the money to the financial institutions that issue it so that it can later be offered as credit in the real estate or agribusiness areas, for example.
Advantages of using bills of exchange
- It presents a higher profitability in many countries compared to savings and time deposits.
- They are exempt from Income Tax for Individuals.
- They usually have some credit fund protection.
Disadvantages of bills of exchange
- They require a higher minimum application, if compared to that of the term deposit.
- In the event that a recovery period of 90 days is defined, the money invested cannot be withdrawn earlier.
4. Direct Treasury
The Direct Treasury is a program developed to allow the online sale of public securities to individuals by the Government.
If in the previous options the investor “lends” his money to banks, real estate institutions or others, by opting for the Direct Treasury, the loan is made directly to the Government.
The investment may be used by the Government to carry out public works and, after a defined term, the investor receives the capital back with its corrected value.
Advantages of direct treasure
- It is an accessible investment, whose minimum values to apply are usually low.
- It offers high security to the investor because they are guaranteed by the National Treasury.
- It has high profitability.
- It has daily liquidity.
Disadvantages direct treasury
- The investor loses profitability if the redemption is made before the stipulated term.
- Requires payment of fees.
- It is not exempt from Income Tax.
How to invest the money? 10 investment tips
Now that you have understood where you can invest moneylet’s go to some practical tips that can help you start your investments.
1. Plan how to invest your money
Before you can invest your money in any of the alternatives mentioned above, it is important that you know how much of your savings you can invest and what you expect from those investments.
It is also essential that you estimate the money that you may need in the short term, so that you can invest what is left over in long-term alternatives.
If you still do not have enough saved and need more time to make investments, a good idea is to make budgets to save more effectively and quickly.
2. Consult a specialist
For those who are just starting out and have no knowledge on the subject, researching on their own may not clear up all the doubts and details about investments.
To be more certain, it is worth consulting a specialist in the field, be it a bank manager, an accountant, an investment analyst or an economist.
In this way, you will be able to thoroughly analyze the options and allocate the ideal value for each type.
3. Let the money produce
Although some of your choices have daily liquidity and, therefore, allow you to make a withdrawal at any time, organize yourself so that this is not necessary.
By redeeming the money before the time, you lose interest, which makes all the effort you made to collect and invest that amount in vain.
4. Have a goal when saving
One of the points to consider when applying the money is the goal you want to achieve with that value.
If you need to have an amount X in a period of 2 years to be able to expand your business, for example, it will be interesting to bet on a format that has greater profitability even if the liquidity is less (which will not be so bad, since it will also serve as motivation not to withdraw the money before the time).
5. Diversify your investment portfolio
If we base ourselves on the previous point related to profitability and risk, we will realize that the best way to earn money by investing is by managing risks well.
And to protect yourself against risks and the possible loss of your savings, the best way is to diversify your investment in different options that are not very related to each other.
So, if you have the opportunity to invest in more than one alternative, this will be your best option. You should not bet everything on a single project, because if it fails, your money will be lost.
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6. Do not mix personal finances with business finances
By separating your personal and professional finances, it is always much easier to see the real situation of your business.
On the other hand, by keeping the two accounts together, you may also have the feeling that your company has more money to spend than it really does, since it will be mixed with your personal expenses.
For example, imagine at the beginning of the year spending on your business that money that…
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