The pandemic has caused different business industries to drastically shift their traditional marketing, operation, workforce, and management ideas. Technological integration, digital transformation, and new health and safety protocols have all effectively dictated how companies serve consumers in the modern age. Recognizing new opportunities for business or expansion come in clutch when venturing into uncharted territory such as the new normal. While many companies have struggled to navigate the pandemic, a keen eye for digital trends and innovation has allowed a select few to break through the difficulties and even thrive.
The pandemic has also brought significant liquidity in the market and those on the other end of the spectrum who are experiencing significant financial difficulties. Such a broad spectrum only serves to highlight systemic issues that further inequalities among the socioeconomic groups. However, there are ways that you can smartly invest in the future of your finances, whether in longer-term plans such as new business ventures or in more traditional instruments. Your appetite for risk plays a large role in determining which of the options are best suited for you.
Banks offer several options, from opening a checking account to investment instruments. The good thing about investing in traditional bank instruments is that they carry significantly fewer risks than other investment opportunities. Some examples are time deposits, UITFs or Unit Investment Trust Funds, and T bills or Treasury bills. Each instrument can serve different functions and liquidity options depending on what you’re looking for in an investment.
1. Time deposits
A time deposit is a deposit in the bank that earns interest with a set or specified maturity date, which is called the “term.” An example is a “certificate of deposit or CD.” The money deposited must remain with the bank for the entire length or period of the term to earn the stipulated interest rate. This type of instrument offers you higher interest rates with high deposit amounts. Time deposits are also relatively liquid as you can pull out the funds given that you’re willing to pay the penalty for early termination.
2. Unit Investment Trust Funds
UITFs are an investment wherein your money is pooled together with the funds of other clients. The bank then invests the pooled money or funds by purchasing assets that generate high-interest rates. UITFs are great because they’re managed by professional investors and involve diverse investments to decrease the risks.
3. Treasury bills
Treasury Bills are investment instruments that have a short-term, fixed interest rate and are relatively secure. Your government issues it, and the term or tenor could be for 91 days, 182 days, or 364 days. Interest payments for T bills are also usually are given in advance.
Higher-risk investment options
There are also several investment options outside the traditional banking instruments that offer higher interest rates and differing levels of liquidity. Capital investments, real estate, corporate bonds, and mutual funds are some of the most popular options on the market for those willing to venture out. While these options come with higher risks, they also offer high rewards. If you’re investing your profits from other businesses and not your savings, you may want to consider these options instead.
1. Capital investments
Venturing into new businesses, whether as a venture capitalist or pursuing other personal business investments, comes with a significant amount of risk. Carefully researched business plans and feasibility studies are done to determine a project’s profitability, and even then, the market can change at the drop of a hat.
2. Real estate
Investing in properties is another great way to grow your profits. Buying and selling properties in up-and-coming or developing areas can also turn into a lucrative business opportunity. However, the downside to real estate investments is they typically have a longer turnaround time as they’re far from liquid. So these investments aren’t easily accessible in case of any emergency.
Investing in stocks requires some significant business acumen or professional guidance. Publicly traded blue-chip companies that exhibit stable and reliable profitability are usually recommended for beginners with a low appetite for risk. There are also opportunities to invest in stocks where you foresee their market share growth in the future.
4. Mutual funds
Similar to UITF’s provided by banks, mutual funds and investment companies pool money from different investors, which are then used to purchase assets. The investment company then issues to each investor shares or units which represent or serve as proof of the participation in the investment. These different companies follow different investment guidelines and are more willing to bet on emerging markets, unlike traditional banks’ more conservative approach.
The route you choose to grow your finances and participate in different business industries relies heavily on your personal needs and lifestyle. There’s no one sure fit for everybody. A hand in multiple options mentioned above provides you with a diverse investment portfolio that benefits your personal finances and business profits.