How can you invest while running a business?

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Date: 8 October 2020

Attractive young business man surrounded by money that is raining down

If you're running your own business, chances are you're watching every last penny that comes into your account.

Even when things are going well, you know what it takes to keep the business afloat so you'll want to be sure you take full advantage of whatever earnings you're able to take out of the business.

Generally, one of the best ways to do that is through investment. Just as employees look to maintain investment portfolios in order to grow their earnings and maximise their wealth, so too should successful business owners. However, in some respects it can be a little more challenging. Running a business, and focusing on maintaining operations, can make it difficult to find the time to invest.

So how can you pull it off? Fortunately, there are lots of options! We've given this a bit of thought and have come up with the following particularly favourable ways you, as a busy start up founder and business owner, can put your earnings into growth situations that won't sacrifice too much time.

Invest in indexes

One of the first options you might consider if you want to invest but don't have a lot of time on your hands is to get a professional to do it for you. This is a sensible idea, but a good argument can also be made that you don't need a professional investor to do the job for you - because an index will often outperform a professional.

The difference is this: A professional will personally construct and manage a portfolio on your behalf; an index is an existing, diversified basket of assets that you can trade as a bundle. Both require minimal effort on your behalf, but there are some benefits to indexes. One is that they often outperform professionals. Another is that they'll typically involve fairly standard investment fees. On the flipside, if you're paying a professional, you'll be surrendering a greater portion of your gains. Granted, investing in indexes does involve some management on your part, but it's fairly minimal in the grand scheme of things.

Invest in CFDs

This is another way to dip your toe into the stock market without having to invest too much time or attention. Essentially, trading stock share CFDs (contract for difference) means setting up and purchasing predictive contracts about stocks rather than buying stock shares themselves. With a CFD you are articulating that you expect a given stock share to rise or fall in value over a given amount of time. This essentially means you're making an investment decision about the potential of a stock, without having to actively manage it or time your sale. Your profits simply depend on the accuracy of your projection (even if the share price falls, so long as you predicted a negative movement).

Trust stable commodities

Another way to grow your wealth while paying minimal attention to your own investments is to invest in some stable commodities for long-term growth. Gold stands out as a good example of a stable commodity. The long-term track record of gold is one of slow, steady growth over time. While it also experiences highs and lows, it's an asset that people have traditionally depended on to rise slowly, to withstand financial turmoil and generally produce a return.

We're not claiming that if you invested in gold today and withdrew your investment in five years you can guarantee significant gains. But it illustrates the general situation that some stable commodities can offer. They tend not to offer lucrative short-term gains, but they can be suitable for a more hands-off investment style.

Try a robo-advisor

A robo-advisor is pretty much what it sounds like. The rise of robo-advisors began a few years ago, basically as a way to bring advanced trading tools to investors who might not previously have been able to afford them. Each of these tools works slightly differently, but by and large they are able to assess your portfolio, take your goals and strategy into account, and advise you on trades (if not execute trades themselves). It's a bit like having an automated professional investor on your phone or computer, accessible at all times and working solely on your behalf.

In most cases the ultimate decision-making is made by you, but you can imagine how a robo-advisor might help you set up a productive portfolio without having to worry about too much day-to-day management.

Conclusion

It is possible for even the busiest of business owners working long hours to put his or her earnings to work and maximise their wealth with minimal effort.

Copyright 2020. Featured post made possible by Adam Ellis.

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