Role of Investment in an Entrepreneur’s Journey
“If you don’t find a way to make money while you sleep, you will have to work until you die”- Warren Buffett
Investment is a very crucial part of preparing the future of one’s enterprise. As an entrepreneur, risk taking has become your forte as you have transformed your personal finances to your entrepreneurial finances. You are mentally prepared for all the risks and downfalls associated with an enterprise, but you need not necessarily put everything at stake. With the right planning, you can secure your savings and help in the growth of your enterprise.
There are several reasons as to why financial investments can be very utilitarian -
- It helps to generate capital for subsequent use. With advancements in technology in every sector, it becomes essential to invest for the growth of the enterprise. Funds generated from these investments, reduces the necessity of taking up high interest loans from banks and hence reduces your financial burden.
- It helps in the multifariousness of business. Complete financial investment in your own business can definitely cause tremendous profits when doing well, but can also generate great losses during a downfall. Investing causes multifariousness of the business which can prevent major losses during a downfall of your own business.
- Investment helps accomplish your individual financial goals. An entrepreneur initially tends to invest their own personal savings in their enterprise; many a times they forget their individual financial needs. These needs can be attained from the interest obtained by investing the principle amount of the enterprise. This helps the entrepreneur run their personal and professional life simultaneously with ease.
- Investment helps in operational expenses. The finances for most of the enterprises necessitates certain operational costs like lucrative payments of the enterprise staff, the required raw material, interest payments,etc. The interest obtained from investments helps in attending these operational expenses.
- Investments help in risk management. Running an enterprise comes in with great risks. An entrepreneur puts in his/her entire funds in their enterprise. This involves great risk. Investment helps them to safeguard their principle amount and generate an alternate income, which can be useful in times of loss.
There are a number of ways through which entrepreneurs can invest.
- Equity Funds/ Stock Funds: Equity funds/ stock funds principally invests in stocks. They comparatively have higher chances of risks, but in long term investments they generate greater amounts of profits, which are highly beneficial for an enterprise.
- Insurance: Insurance is one of the best methods to protect one’s assets. In times of severe losses due to certain unfavorable circumstances, insurances can prevent the enterprise from suffering through major loses.
- Overnight Funds: An overnight fund is a type of mutual fund that attains maturity in a single day. This is one of the best type of investment for an entrepreneur. These funds allow you to invest in a bond which can have returns and you get the profits the next business working day. These overnight funds have the least possible risks.
- Liquid Funds: Liquid funds are funds which invest in debt schemes and major money market schemes. The maximum you can invest in these is for 91 days. These funds may not have very high returns, but the risk is low and one does not incur major loses when they immediately need funds in hand.
As a concluding remark, a true entrepreneur is the one who doesn’t only know how to generate income from his/her enterprise, but also from the income generated from their enterprise. Enterprises require long term planning and a structured investment plan for their growth in the long run.
References:
“Never depend on a single income, make investment to create a second source.”- Warren Buffett
