When deciding where to invest your money as a small business, it’s important to understand your options. Investing your money can be a great idea, or one that thwarts all of your efforts to move forward. Bonds and stocks are common and typical ways in which businesses and individuals can invest their money. For sake of simplicity, I’m sticking to bonds today. Here are a few tips for bond investment advice for small businesses.
1. Bonds are relatively safe investments. Bonds are less volatile than stocks and average returns of around 5% a year. While stocks are often more profitable, bonds offer less of a risk, which is something small businesses often need.
2. Bonds offer tax savings. There are certain types of bonds that offer tax-free income. Do your research to find ones that apply to you and you can sometimes earn higher after-tax returns from these types of bonds.
3. Diversification is good for your portfolio. By adding bonds to your investments, you can cushion any ups and downs that stocks take. This will help you increase your return potential over time and not create more risk.
4. Bonds offer security. The U.S. Treasury is one of the safest places to keep your money. You’ll be keeping your money in a safe place with little risk of losing anything.
5. Do your research and plan. You need to make sure that you are making the right decisions for your small business. Do your research to decide what type of bonds would be best and when the best time would be to invest in one or a few.
Investing money can be a scary thing, but by adding in a few bonds to your portfolio, you will create diversity, stability, and safety.