If you’re looking to earn an additional income income with your small business, you may be considering investing. Forex trading is a particularly popular option, though if you don’t have any knowledge or experience, it does come with some pretty high risks. Here we’ll look at some of the best investment options for small businesses you might want to consider.
Stocks and Shares
When you think of investments, stocks and shares are typically the first things that spring to mind. Otherwise referred to as “ownership investments,” shares give you a small portion of another company, allowing you to cash in on some of its profits. The more shares you have, the more profit you’re going to make.
However, the more you do invest, the higher the risk. The value of your shares can fluctuate daily. If you’re new to investing, it will help to research as much as you can about stocks and shares before you attempt to get in on the action. There are literally thousands of different stocks you can invest in, so having some knowledge of the market will really come in useful.
Many business owners get confused between forex and stocks. They are not the same thing. While in essence they involve much of the same activity, the forex market has far fewer options than stocks, making it an ideal choice for the beginner.
Rather than investing in companies, instead the majority of forex traders tend to focus on currencies. These can change hourly, and while there are fewer options than there are with stocks, forex trading can be much more complex. In fact, many traders develop their own unique strategies, and many prefer to rely on specialist online trading platforms.
If you are considering getting into forex trading, beware of inaccurate, unreliable platforms. Try to stick with a respected, reliable option such as ETX Captial.
Money Market Funds
Looking for a simple, low-risk investment? Money market funds could be worth considering. They aren’t as popular as stocks or forex trading, but they do present minimal risk. Of course, this also means they provide a low return on your investment, so if you’re looking for an opportunity that’s going to give you a substantial extra income, this likely isn’t for you.
This is also largely an American form of trading, though you can still participate in the UK.
Choosing the Right Type of Investment for Your Business
Whichever type of investment you do opt for, it’s vital you do as much research as possible before you begin.
In order to choose the right type of investment, you need to consider three main factors:
- How much of a risk you’re willing to take
- How much flexibility you want
- How experienced you are with investments
Out of all three options, stocks are considered the riskiest and least flexible. You have to spend a lot of time sifting through thousands of stocks to find the best value investment. Then, if the market hits a low point, it makes it really difficult for you to make decisions quickly. You can’t just get in and out of the market as quickly as you can with forex trading. This means you could make much more of a loss.
Money market funds are safer, but as mentioned above, you won’t get much of a return. So, that leaves forex trading. The majority of businesses tend to stick with forex as it’s easier to make fast-paced decisions and there are far fewer options available.
Overall, investing can be risky, but providing you develop a good level of knowledge on whichever type of investment you choose before you start, there is the opportunity to earn a significant amount of money.
Ben Barlow is a contributor to BusinessTown.com