Discussions on investments have been on the rise in recent years, as more individuals and businesses are beginning to see and experience the advantages. However, while salary earners could rely on their pension for retirement, it’s not the same for entrepreneurs. This doesn’t mean you have to be completely clueless about your finances or have no plans for your retirement. This is where investment options come in, as you can include them in your plans to hit your financial goal.
This article highlights some major types of investments every entrepreneur should know about.
1. Stock Trading
The stock market is wide and one of the most discussed topics in the finance and investment world today. About 2.2 million people were reported to have been subscribed to a stocks & shares ISA account in 2019, with 13.5% of UK shares owned by individuals and the rest owned by institutions like banks and investment firms.
The stock market is large and if you will be investing in it, there are two types you should be familiar with- the preferred stock and the common stock. With the preferred stock, you will get a guaranteed payment each quarter but you get no voting rights to shareholders. On the other hand, common stocks are the most preferred, as you get voting rights and they also tend to do relatively well in the long run. Stock trading UK or abroad can be complex but getting to grips with the basics of different stock options is a good start.
2. Corporate bonds
Corporate bonds involve loaning money to a big company and getting some interest and the best way to invest in them is via ETFs and mutual funds. They are considered a higher risk of investment compared to government bonds but you also have access to a higher return rate compared to the rates offered by the government. The flip side of this is that if the company you have invested in doesn’t make progress as it should, then you might not get the desired rates and might lose money in the process.
3. Treasury bills
Treasury bills or T-bills are short-term securities and are also referred to as an almost risk-free investment option. If you have a low-risk appetite, treasury bills might be a great option to consider. However, a low-risk investment would have minimal returns. So, while your money will be safe in T-bills, your annual returns might not be more than 2-3%.
The bottom line
There are other options to consider such as Certificates of Deposit, Government Bonds, Options and Futures, and Personal Investments. Always do your research to be sure of the returns you are likely to get on any investment you make. Failure to do appropriate research could create a dent in your personal finance goals in the long run. The goal for you as an entrepreneur is to ensure that you’re never stranded even as you focus on your business.