How to invest money?
Listening to advice for investing money is crucial in any entrepreneurship and business.
We can say that it is common for people, regardless of the work they do, to seek financial stability, but with the concern of having to carry debt 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 own a business can bring, especially for beginning entrepreneurs.
We know that when money is stationary, easily accessible, and with no specific destination, it is easier to spend it irresponsibly and unnecessarily.
Therefore, we are going to share 7 tips to invest money and have the guarantee that, when you need it, you will have that value available (plus the returns!).
We know that when money is stationary, easily accessible, and with no specific destination, it is easier to spend it irresponsibly and unnecessarily.
Therefore, we are going to share 7 tips to invest money and have the guarantee that, when you need it, you will have that value available (plus the returns!).
The importance of investing money and diversifying investments.
Some investments allow you to put a small amount into them, while others require a higher value to start.
With the 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 research the market, you will see that there are investment options available for every 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 undergoes many oscillations, mainly in more fragile economies, if you put all your money in one place, in the event of a fall, you can suffer a lot of damage or even lose all the invested value.
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.
What value to 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 the profile of the entrepreneur.
However, there are some calculations you can do to think of an amount that is ideal for reaching your goal.
Start by recording all your fixed expenses, such as rent, financing, electricity, water, health plan, telephone, Internet, monthly bills, taxes, or studies, among others. Do not forget to enter the expenses generated by your company, such as the rent of the space (if it is the case), the production costs, and the payment of the suppliers.
Register a cash flow value, the one necessary for the company to keep 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 value per month, it will be easier to achieve expressive results in 1 year.
Investment types
There are very different types of investment in the financial market, so we are going to present their main formats and explain what differentiates each 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 ones are the most appropriate to the goals you established for your venture.
Saving
Saving 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, you only need 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 security when needed.
Advantage
• 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 fees.
Disadvantages
• In some countries it may be under performing.
• 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 or more, that is, once a year. If you withdraw 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.
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, by investing in a term deposit, you lend your money to the bank and receive in exchange the payment of the interests of the operation, which can be pre or post-fixed.
In most cases, the longer the application period, the higher the value offered.
Advantage
• 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 compared to other types of investment, which allows the withdrawal of the money to be made after a short period from its application.
Disadvantages
• In many countries it suffers the incidence of Income Tax, with varied taxation according to the term of the investment.
• It requires a minimum initial amount, which can be difficult for those who are starting and / or are not yet clear on what value to invest.
• Normally it cannot be withdrawn before 6 months.
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 returns depend on the market to which the security 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.
Advantage
• It is more profitable 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
• They require a higher minimum application, when compared to that of term deposit.
• In the event that a recovery period of 90 days is defined, the invested money cannot be withdrawn earlier.
Direct Treasury
The Direct Treasury is a program developed to allow the Government to sell public securities online to individuals.
If in the previous options the investor "lends" his money to banks, real estate institutions or others, when 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 period, the investor receives the capital back with its corrected value.
Advantage
• 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 presents high profitability.
• It has daily liquidity.
Disadvantages
• The investor loses profitability if the redemption is made before the stipulated term.
• Requires payment of fees.
• It is not exempt from Income Tax.
7 tips for investing money
Now that you have understood where you can invest money, let's go to some practical tips that can help you get started with your investments.
1. Seek to invest money in different options
As we have already seen, each of the market investment options has advantages and disadvantages that can significantly influence performance.
Thus, before deciding, do an extensive search of the options and carefully evaluate them to choose the ones that best suit the characteristics of your business.
2. Consult a specialist
For those who are just starting out and do not have any knowledge on the subject, researching on their own may not clear all the doubts and details about investments.
To be more sure, 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 can carefully analyze the options and allocate the ideal value for each type.
3. Let the money produce
Even if 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 ahead of time, you lose interest, which makes all the effort you made to raise and invest that amount wasted.
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 lower (which will not be so bad, since it will also serve as motivation not to withdraw the money before the time).
5. Don't 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, it will also be possible that you have the feeling that your company has more money to spend than it actually has since this will be mixing with your personal expenses.
For example, imagine at the beginning of the year spending that money that was reserved to pay taxes on your business and then not having a way to replace it!
6. Save on the little things
In our day today, we buy many low-cost things that at the time of doing so it seems that will not affect our general expenses at all.
However, when we add it all up at the end of the month, we find ourselves with a huge account, full of “little things”.
A tip to save more money is to be attentive to these minor expenses that, if they are reduced, can generate a good economy and allow you to make a greater investment.
Here are some examples:
• When buying food and cleaning and hygiene products, you can spend more time looking for the best prices and promotions in establishments. In the case of food, spending on seasonal foods can also be cheaper, in addition to allowing you to consume some that were not part of your routine.
• When it comes to transport, try to leave the use of private transport applications only for times of need, walking and using public transport whenever possible.
• If your concern is that outing with friends, nothing prevents you from reserving a fixed amount per month. Thus, you will be able to maintain and adapt your personal life without overreaching yourself and hurting yourself financially.
7. Invest the extra money
It could be that you do a job as a freelancer, receive back an amount that you had loaned a few years ago or have access to any money that was not foreseen in your fixed earnings.
At this time, try not to get excited and spend everything on superfluous things. It is difficult, we already know, but think long term and put that value in your investment to increase your income even more.
It's time to invest money in your business.
Now that you have seen that investing is not a seven-headed bug, you can start organizing yourself to invest money in the best possible way.
Remember that, in addition to allowing you to multiply the financial return of your business, part of the performance can be used to make improvements in your company, helping you to be more and more successful.
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