Investing your profits

As a business owner you know that it is essential to analyze your profit and loss statement for the month or year. Your accounting records will show your purchases, sales and other expenses.

Now you have to decide what you should do with your profits. First make a budget for the next month or year, you can roughly figure this out if you follow your previous accounting statements. A budget is just an indication how your expenses are going to be in future. Actual values might show a little difference, because you are preparing your budget based on assumptions.

Allocate the amount you will need to cover the budgeted expenses. It is always wise to allocate a little more than budgeted. Allocate some money to pay your bills and your personal use. The amount left is the money you should use to invest in order to improve your funds in future. It is better to make your funds grow than letting it stagnate in the bank. Why not invest in shares? When advising you to invest in shares, I am not telling that every person should do this. You must have enough funds and must be able to handle a loss in a crisis. Shares can be a risky investment some times. So please do not invest all your profits in shares. To be in the safe side deposit some in a bank.

There are several methods of investing money; usually people use bonds, securities and shares. Bonds and securities give a low return but they are safer. Shares give a quick return and easy to handle. But the risk is higher than other options. Let’s see how you can invest your profits.

You can find a broker to manage your funds. They will advice you on what stock you should invest. They are experienced and will always choose the safest options. But they can also make mistakes. Share value of a company can change due to Movement of the stock market, Political issues, Taxes and many more reasons. Some factors you cannot change.

Other method is, use your bank’s discount broker and do your investing yourself. Every bank has its discount broker. They also have their advisers if you wish to get advice. But you will have to pay them for it. You should do this only if you have a good knowledge of financial indicators and ability to assume a company’s growth. You have to be very vigilant. Read financial news every day, and keep a close look at stock movements. Before you invest in shares or other investments, be aware of the financial risk involved and make sure that you are able to accept that risk. Share prices can rise or fall rapidly.

The benefit of doing your investment yourself is, you do not have to pay a broker and your brokerage fee is saved. You only have to pay the transaction fee taken by the discount broker for doing your transaction. A discount broker is always quick to process your order while a financial broker will take a bit longer. If you hire a financial broker, you will have to pay brokerage fees and other fees that apply on investing. But, again safety must be considered first. You will have your own option of investing in this way. If you want a short term good return, you can opt for it and invest in a particular industry and if you have a long term goal, you can invest in a stable slow growing company. You always have your own choice of investment using this method.

How can you invest money yourself? I do not want to make this article longer. I will be here soon with the “How can you invest money yourself?” Meanwhile I wish you all the best.

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2 thoughts on “Investing your profits

  1. Putulchandra

    Hi Mahesha After going through your kind suggestion I got few relieve from few puzzling of investment.Thanks a lot.

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