Running a business often feels like you are running two different budgets simultaneously. If you have already managed to separate your personal and business finances, you are on the right path towards managing your money effectively. However, you need to soon start thinking long term, unless you want to continue working until you are 80. Clever investments early in life can help you achieve your goals and live the life you deserve, without having to get into debt. Below you will find ten tips on how to make your personal and business investments give you the highest long term return possible.
Invest in Research and Development
To remain competitive in the fast-changing marketplace, you will need to stay ahead of the game, and invest in research and development. The good news is that you can get a tax rebate on these investments, therefore, you have absolutely no excuse not to get started now. Research new technologies that can make your business more efficient, compliant, and profitable. If you stick with old methods, you will have to settle for the old profit figures. Investment in research and development can help your business survive difficult periods in your industry.
Focus On Your Property Portfolio
Renting your house will not get you on the property ladder. Likewise, if you carry on paying a high rent for your business premises, you will never build assets. If you can afford to get a lease on an office building or a commercial unit, you can create a long lasting asset, and this way you will eventually reduce your operational expenses with no lease or rent to pay. This will improve your business cash flow, so you can keep on improving your business.
Pension Plans
Self employed people are often budgeting from one month to the next, without focusing on their long term personal plans. If you don’t have a pension portfolio yet, it might be time to get in touch with an experienced financial advisor and look into your investment opportunities. From stock market based pensions to foreign exchange market plans, you can choose the right package that gives you the right level of risk and investment. You can find out more about different investments and learn more about stocks if you research online sources and consult with professionals.
Life Insurance Policies
To protect your business and your family’s future, you might want to take out a life insurance policy that covers all your outstanding debt. If your business has credit and you pass away, your family members might be forced to sell your company for less than it is worth, instead of being able to continue what you started and cared about. Make sure that you take out a plan that has a minimum payout at the end of the term, not only if you die.
Multiple Currencies
If you already know something about currency trading, and want to stay safe, you might want to keep your savings in multiple currencies. Trading with international companies means that your business is vulnerable to currency fluctuations, and you might see your income decreased because of a sudden fall of dollars or Euros. Instead, try to have a reserve in different currencies, so you can exchange them at the best price and get the most money for your work.
Business Property
Building a property portfolio and assets is not only important in private life, but also in business. Instead of renting equipment, try to buy them on a credit agreement. This way, you will be able to upgrade your technology by trading in or selling your assets. This method is similar to buying a car: if you enter a lease agreement, you will not own the vehicle when the credit runs out, and you have to start again. However, if you take out credit and buy it, you can use the value of your car to upgrade to your next wheels.
Focus on Residual Income
To keep your business out of financial trouble, you might want to build a residual income, instead of relying on large, one-off orders. Invest money in developing products and services that will be delivered to your customers on a monthly and yearly basis, so you can maximize your customer value, and stay safe even when those large contracts are not coming in.
Investment in Self Development
One of the best investments in your business and personal life is in self development. You can enrol to a new course, or take on a management training that will make you a more effective training. You will get a high return on investment, and see the results of your learning for many years to come.
Business Continuity
Training the right people to take over your business when you no longer have the energy or time to run it is an important decision to make when you are nearing retirement. You can train people who can replace you occasionally, so you can take some personal time, or pass on your knowledge to your family members. This way, you can rest assured that no matter what happens, life doesn’t stop without you, and you have someone to take responsibility. Likewise, your business has to develop a contingency plan for unexpected emergencies, to make sure the financial and personnel aspects of running your venture are covered.
Market Research and Development
If you don’t know your market, you will have no chance to sell to people in it, Investing in market research and development will give you a competitive advantage, and allow you to create better and more suitable products for your customers than other companies. If you can tailor your services to your customers’ needs, you can increase your market share rapidly.
When it comes to your personal and business finances, it is important to consider your long term goals and plans, and have detailed plans on building your portfolio, increasing your assets, and making sure that your business is able to survive difficult times. Make your long term investments deliver higher returns, and you can enjoy a comfortable retirement later.
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