When you own a business and your sales are growing rapidly then you are probably in the right direction. It is important to understand that you are not out of the woods yet! When a company is growing, it can face some serious cash flow problems. These issues are because the company is not running its finance, operations, or investment activities properly.
For example, if the debts are due to be paid before you get your receivables then you might face some serious cash flow problems. This means that you might not be able to pay your bills on time, which can consequently affect your business and your creditworthiness.
The only way to get out of this conundrum is to create new sources of cash flow. We have created a list of some of the most profitable investment opportunities in the year 2020.
1. High-Yield Savings Accounts
High-yield saving accounts are just like the rest of saving accounts, but they come with fewer overheads and you can get higher interest rates. You can access the cash by linking your account to your main bank or through an ATM.
A savings account is a much preferable option if you are looking to get access to your cash shortly.
2. Certificates of Deposit
Commonly known as CDs, Certificates of deposits are offered by banks. These certificates are offered at a higher interest rate than your regular savings accounts. These certificates have a maturity period that can range anywhere between a few weeks to several years. During this time, you cannot withdraw your cash without paying a penalty fee.
These certificates accrue interests throughout the chosen maturity period and are the perfect option for those investors who are either saving for their retirement plan or are looking for a long-term investment strategy.
3. Money Market Accounts
Money market accounts are usually high-rewarding deposit accounts. These accounts are FDIC-insured. These accounts require a higher minimum deposit cap and offer higher interests than saving accounts. Because of their relatively liquid and high-yielding characteristics, these accounts are a great option for emergency savings or your rainy day account.
Because of its high-yielding property, these accounts have stricter restrictions regarding withdrawals. This option is great for novice investors who are looking to create a little cash flow or want to set up an emergency fund.
4. Treasury Securities
The government of the United States of America issues several kinds of securities to pay for its projects and debts. These securities are some of the safest investment opportunities out there. Treasury securities offer guarantees against the loss of your principal investment.
These bills have a maturity period of around 1-year. These bills are not technically interest bearing. They are sold at a lower value and when they mature the government pays you its appreciated price. Treasury bills are sold in the form of two, three, five, seven, and ten years. The buyers will get their interest every 6 months. After the maturity period ends the buyer gets to have the appreciated value.
Buying a T-bill is all about timing. If the demand is high in the market for T-Bills, then it is wise to stay away from them as they offer lesser returns on investment.
5. Real Estate Investment
Real estate investment is one of the safest investment opportunities when it comes to investing your cash to generate wealth. There are plenty of ways you can invest in the real estate market passively. One of the most popular forms of passive investments in real estate is becoming a silent partner with an active real estate investor. This form of investment will allow you to focus on your primary business as your rent checks keep on coming without you having to lift a finger.
Another form of passive investment is buying shares in REITs. This form of investment is sort of like investing in the stock market but without the uncertainty. In this form of investment, you pool your capital with several other investors to invest in a bigger project. You can take out your investment anytime by selling your share of the investment to your partners.
6. Dividend Stock Funds
You can invest in the stock market more safely by investing in stocks that pay dividends. Dividends are profits of the company that are divided among the shareholders. These dividend stocks help you earn on your investment on a long-term plan. This option is an excellent option for intermediate to advanced investors. You can buy a group of dividends stocks in a bunch to reduce your risk.
6. Rental Housing
Rental housing can be a great investment opportunity if you are willing to afford a property manager to manage your property. For passive investors, managing your property on your own can be a hassle. It can become even more difficult if you don’t have any experience regarding property investment. To get the maximum out of your investment you need to select the right location and the right property manager to manage your property.
7. Municipal Bond Funds
Municipal Bonds or Muni are invested in municipal bond funds. The interest earned on these bonds is usually free of income taxes. According to FINRA, muni bonds may be bought individually through a mutual fund. You need to consult with your financial adviser to find the right investment type.
These bonds act as the perfect launching pads for novice beginners as these bonds provide a diverse exposure without having to face a lot of risks.
Some disadvantages of these investments opportunities:
- High-Yield Saving Account: You risk gaining less upon reinvestment because of inflation.
- Certificate of Deposit: When interest rates fall, investors will earn less when they reinvest principal and interest in new CDs with lower rates.
- Money Market Accounts: If inflation rates exceed the interest rate earned on the account, your purchasing power could be diminished.
- Treasury Securities: If you try to sell your bond before maturity, you may experience a capital loss.
- Dividend Stock Funds: Make sure you invest in companies with a solid history of dividend increases rather than selecting those with the highest current yield.
- Rental Housing: You can overpay for housing plus the lack of liquidity is also a problem.
- Municipal Bond Funds: In these bonds, the issuer becomes unable to make further income or payments.
Investment in your profits is a great way to diversify your cash flow. This way you can create a cash flow that can support your business as well as provide you with opportunities to widen your business model. There are plenty of other ways to invest your profits from your main business. Real estate investment is one of the best options among others to diversify your investment portfolio without risking your capital.
Passive real estate investment is one of the best ways to capitalize on your profits and create a separate income stream. This method will help you create generational wealth along with cash flow. If you are thinking to invest in real estate, you can contact your nearest real estate agent to help you identify nearby profitable markets.If you have any unanswered questions or want to learn how to invest passively in Multifamily, feel free to visit https://stroudsburgrei.com/partners/ –watch a short video and learn how to get above-average returns. Feel free to sign up for our investor’s newsletter to receive updates on the Real Estate market and any upcoming investment opportunities.