One thing often associated with entrepreneurs is that they are not averse to taking the occasional risk or two, with their attitude being that, over time, the wins will outweigh the losses. Risk also plays a part in investment planning, and as all financial planners who are honest with you will tell you, there is some level of risk that the value could go down in every investment.
Thankfully, with effective investment planning and professional financial planners advising you, your experience should be one of rising investment values rather than diminishing ones. That brings us to the question of what investments you will make.
When discussing investments with your financial planner, you will soon discover several ways to invest money, and the characteristics of each one vary. Some investments are incredibly high risk; others have minimal risk. Some are complex; others are simple. Some offer high returns, others steady growth. As you can imagine, with all those variations, investment planning means making several decisions.
To get you started toward making some choices, we have listed ten investment options that many entrepreneurs have opted for. Not all of them may be recommended by your financial or investment planner, and the returns and risks vary greatly, so make your choices wisely.
Savings Accounts: One of the more straightforward and very low-risk options where you deposit your cash in a high-interest savings account or term account, and your balance increases due to compound interest being applied over time.
Fixed Income Bonds: These usually have a fixed period, such as 5 years, and tend to be regarded as being low risk as many are issued by the government. Regular interest is applied, meaning when the term is completed, the value of your investment has increased.
Domestic Shares: One of the best-known means of investing, and in this case, it would be on the Australian stock exchange. Share investments never have any guarantees, but if you follow the advice of share investment advisors, you should see a healthy return.
Overseas Shares: This option is extremely risky, but the returns can be huge, which is why many investors try it. Here you invest in overseas companies listed on foreign stock exchanges such as London, New York, and Frankfurt.
Property: A form of investment everyone knows and is relatively easy to understand. Risks are low, bar the occasional housing market slump, and returns include rental income and capital value increases.
Managed Funds: Here, you have a portfolio of managed investments into which individuals invest for a share of the total returns. This provides opportunities for individuals to gain returns across a broader range of asset classes than they might be able to on their own.
Annuities: For any entrepreneur with retirement planning in their mind, annuities provide a guaranteed return based on the payments you have made. These payments can run over many years and be made from your superannuation if you are prepared to wait for a payout until you retire.
Commodities: Examples of commodities include gold and silver, and whilst their prices can fluctuate, over time, they have proved to offer an excellent ROI. Alternatives within the commodity investment options include derivatives and mining stocks.
Collectibles: Items such as postage stamps and autographs are an interesting, fun, and often lucrative means of investing money. Some collectibles change hands for thousands of dollars, and you can even create an investment portfolio of multiple collectible items.
Cryptocurrency: A recent phenomenon, cryptocurrency has many advocates who will swear they have made tens of thousands of dollars, and others will declare the opposite. We would suggest that you get sound advice before investing in cryptocurrency, and if you do, diversify across several of them.