Short and long term investments for budding entrepreneurs


As a young entrepreneur, you might be more focused on your business or your marketing strategy. But one thing that you shouldn’t miss is your investment strategy. Investing your money is as vital as learning how you can run a business. In fact, knowing how you can make your own money work for you is essential because you even have the skills to do the same for your business.

If you are still not investing, this is your sign to start now and take charge of your financial security. In this guide, we’ll focus on the best short and long term investments you can get started with.

1. Savings accounts

Even the most successful entrepreneurs start by developing their savings accounts. If you are still in the initial stages of being one yourself, it is best to focus on your personal goals first and having multiple savings accounts is a big help. You can start saving for retirement, an emergency fund, major personal purchases, or even a startup fund for your business.

This is a better alternative than keeping all of your money in a checking account. Find a bank that offers the highest interest rates. Typically, digital and online-only banks provide up to 2% per year. Typically, a savings account will give you up to six free transfers per statement cycle.

2. Money market accounts

Known as a type of bank deposit, money market accounts are available at banks or credit unions and also bear interest. Typically, these accounts earn higher interest than traditional savings accounts, but also require a higher minimum investment. However, it is important to note that, like savings accounts, the interest rate is not as high as that of other types of investments.

Money market accounts are considered ideal for short-term savings since their risks occur over time. Its average interest rate can make it difficult to keep track of inflation if you’re looking at the long term. Money market accounts are also very liquid like savings accounts.

3. Cash management accounts

Unlike savings and money market accounts offered by a bank or credit union, cash management accounts are primarily issued by other institutions such as brokerage firms. Usually similar to a standard checking account, cash management accounts come with a checkbook, debit card, and online payment services. Most of these accounts also have a higher interest rate than conventional checking accounts.

It is important to note however that cash management accounts are more advantageous for investors who already have an account with a brokerage firm. If you plan to invest a portion of your income, you can only manage your investment accounts and personal finances in one institution. Nonetheless, such type of account is ideal for maximizing investment profits and managing investment cash flow.

4. Real estate investment fund

Another great investment to consider is Real Estate Investment Trusts (REITs). Essentially, REIT earn money by managing properties and financing real estate mortgages. It operates in different industries including shopping malls, data centers, hotels, retail, apartment buildings, single family homes and even warehouses.

Opting for such investments can potentially offer you high dividend yields, real estate diversification and no management hassles. To get started with a REIT, you will need to buy into the trust to get a share of the profits or ownership of the underlying real estate. Considering its performance and income history, this investment is a great option for creating a well-balanced portfolio.

5. Bond funds

Whether it is an exchange traded fund (ETF) or a mutual fund, this fund contains several bonds from different issuers. Each type of fund is classified based on a number of factors such as the issuer (federal government, municipality or company), the level of risk and the duration of the obligation. Some types of bonds you can choose from include savings bonds, treasury bonds, corporate bonds, mortgage backed securities, and municipal bonds.

In terms of investment portfolios, bonds are an excellent counterpart to equities. Stocks, although they tend to offer higher returns, are much riskier and more unpredictable when it comes to how to invest. Bonds, in general, offer diversification, along with a higher degree of security and relatively predictable returns. This type of investment is ideal if you want something that is low risk but is likely to offer regular interest payments or stable income.

Note, however, that it is not necessarily mandatory to start each of these short and long term investments. But if you can work it step by step, you are surely setting yourself up for financial freedom. The best thing is that these multiple streams of income can help you fund your future business.

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