In today’s fast progressing world, business growth is every entrepreneur’s utmost priority. They consistently look for opportunities to expand revenue streams and improve profitability levels. However, with rising competition in the corporate sector, investing additional capital into the same business can be risky. In case the company experiences a downturn, your life-long investment can be in jeopardy. Therefore, explore other investment options to boost sales and income.
Nowadays, the global stock market is offering profitable returns. The stock prices of the pharmaceutical industry and healthcare sector are touching an all-time high. Likewise, the oil companies share prices show an upward trend, opening doors to high share premiums. You can also invest in debt instruments or money market funds to enjoy more lucrative returns.
Nevertheless, don’t forget to consider your risk appetite before making any investment. Sometimes, investors expose themselves to more risk they can tolerate, putting all their money at stake. Hence, look into different investment options and select one that fulfills your company’s financial needs with minimal risk. Do you know about any rewarding investment opportunities? If not, have a look below. Here are seven lucrative investment options for companies.
1. Bank Deposits
Undeniably, opening a savings account in a bank is perhaps, the safest form of investment. It offers fixed interest on savings with minimal risk exposure. However, most people think of this investment option when the interest rates are high. In reality, bank deposits always have the scale to offer higher returns. But it takes the right eye to identify that opportunity. Hence, if the interest rates in your country are low, why not invest overseas?
With minimal restrictions on international transactions, the concept of offshore banking is becoming pretty popular. Entrepreneurs can look for interest rate changes in the global markets and immediately invest in countries with the highest rates. In addition to increasing the earning potential, you can also benefit from currency fluctuations and enjoy additional premiums.
2. Currency Trading
Have you heard of forex markets? These are foreign exchange markets where you can trade one currency for another. As the currency rates change on an hourly basis, you can find many arbitrage opportunities. For instance, if the USD has depreciated against the British pound (GBP), you can buy dollars. Once the dollar comes back to its original position, you can sell them at a higher price. Before investing in any currency, understand the factors that appreciate and depreciate the currency. Whether it is political unrest, economic uncertainties, high crime rate, or changes in fiscal policy – you should know what can cause fluctuation in the currencies.
3. The Stock Market
When we talk about investment, stock markets are the first thing that hits the mind. Undoubtedly, stocks are one of the most diverse investment options. From different sectors to companies – people have plenty of options available. You can also buy individual stocks and become a partial owner of the company. Similarly, you can utilize stock options to mitigate the market risk. For instance, you can sell the stock on the spot at a future price through hedging. Hence, if the stock price decreases in the future, you won’t be at a loss.
Besides this, learn the art of portfolio diversification when investing in stock markets. Instead of stroking all your money in the petroleum industry, invest it in the manufacturing, banking, or cement sector for better returns.
4. Mutual Funds
In the finance world, some investors prefer creating their pool of funds to incur significant investments. Thus, they develop a mutual fund where different people invest some percentage of their savings. They hire a money manager who invests that money and attempts to gain higher returns with mutual agreement. Usually, mutual funds consist of a combination of stocks and bonds – investments that carry minimal risks. By the end of every quarter, the money manager divides investors’ returns based on the profit-sharing ratio. Honestly, it is the most hassle-free investment option since another person manages your money.
Today, cryptocurrency has become a buzzword in digital markets. From private investors to corporate executives, everyone is investing money in cryptocurrencies. Crypto offers higher returns than all other investment options in the market; additionally, cryptocurrencies are highly liquid. Meaning, you can instantly sell them and get cash-in-hand.
Besides, with their decentralized nature, they tend to change the conventional financial systems. They facilitate transactions beyond borders with no transactional costs. Above all, the number of crypto projects is also increasing. Recently, Elon Musk announced that soon, people would be able to buy Tesla with crypto. Thus, make sure your company has a fair share of different cryptocurrencies.
6. Real Estate Industry
The real estate industry has always been in the limelight for its lucrative returns and incredible profit margins. But unfortunately, this investment option isn’t open for anyone because it requires hefty amounts of money. Real estate investors earn money through rental income and property appreciation. Since this investment offers passive income, it can drastically improve the company’s cash flow position. Simultaneously, as a real estate investor, you can take advantage of numerous tax deductions and breaks to reduce your company’s taxable income. Hence, if you have a substantial investment budget, invest in real estate.
7. Bonds & Securities
Are you looking for low-risk investments? Bonds and securities could be the perfect option for you. To put it simply, investing in bonds is like loaning money to a credible party and earning interest on it. Generally, they offer a higher interest rate than the market with a maturity of 10-20 years. The credible party could be the US government, state, or private firm. Here is a list of different types of bonds and securities.
- Savings Bonds: The US government issues saving bonds which means, it has a money-back guarantee from the government, making them risk-free. Instead of interest rates, these bonds offer premiums since governments sell them at a discount.
- Corporate Bonds: These bonds are slightly riskier than saving bonds because a corporation is issuing them. As a result, they offer interest on the principal amount annually.
- Perpetual Bonds: The perpetual bonds don’t have a maturity date. Hence, bondholders can enjoy interest throughout their lifetime.
- Floating Rate Bonds: Unlike conventional bonds, floating-rate bonds don’t have a fixed interest rate since it keeps increasing and decreasing with market fluctuations. Although these are riskier, they also offer higher returns.
Nowadays, every company is actively investing money outside of the corporate world to expand income sources. You can invest in stock markets, bonds, real estate, and cryptocurrencies, but only after considering your company’s risk tolerance level. Likewise, you have to determine which investment option aligns with your business goals to make the best possible choice. If you have a solid financial standing, feel free to invest in cryptos; otherwise, stick to bonds and bank deposits.