Finding the right investment for your business

Business must find the right investments for their capital.All businesses except not for profit businesses exist to make money.Assuming that they do make money, they need to find places to invest that money to continue to make it grow.A business can invest in a variety of investments from themselves to the stock market.You will need to determine what is best for your business.

You will want to analyze how much money you have, are expected to have and how long it will be available.This information will help you decide the best location to put your money if it is a temporary investment or a long term investment.You will also want to decide how available the money needs to be.For instance, if the money is in a money market account, you will be able to get to it almost instantly.However, if you have invested it in a six month cash deposit, you will have to pay a penalty to get it immediately or wait until the six months have ended.

You must also decide the amount of risk you and your business are willing to take.Usually, the more risk you take, the better your returns will be.If you are running a small family S Corporation, you may have more freedom in the amount of risk that you can bear versus a larger corporation.

Many people will argue that the best place to invest the money will be your own company.You will be able to best control your money and know what types of return you will get on the capital expended.You could use the money to expand the business into other markets or to upgrade your equipment.When you invest your funds in another company, they will be doing the same type of investment for their company.

You may also want to consider real estate as an investment.Many large companies use real estate to hold capital and most types of real estate appreciate very well.Additionally, you will have property tax, but you will not have to spend capital gains tax each year.This can be a good way to protect your gains over a longer period of time.Depending on your business, you can also position yourself for expansion in the future.

If your number one goal is to keep your funds liquid for emergencies or quick expenditures, you may want to consider a money market.The money will be readily available in the money market.However, the money market only gives minimal returns.You will most likely not even make enough money to cover the purchasing power you lose due to inflation.

If you want to ensure your principle and have a longer period of time that the money will not be needed, you may consider investing in bonds or a cash deposit.Normally these have a maturity date that you will be able to sell them for.The cash deposit will return your principle and a set amount of interest.Bonds can be issued by many different entities so you will want to research what the different characteristics are of the bonds you want to purchase.The bonds that are the most secure are issued from the federal government, but they also have the least return for your investment dollars.

You may also invest on the stock market in a mutual fund or even directly into stocks.These investments have the potential of larger returns, but you may also lose some or even all of your principle.You will need to be very careful when you invest your funds in the market.

In summary, as a business you can invest in just about everything an individual can.You will need to evaluate your liquidity needs and your risk tolerance.Once you have analyzed these factors, pick the right investment for your business.