UOB bank
3 tips on balancing funds to run a business and invest at the same time
These days, an uncertain global growth outlook, lingering trade tensions, and highly volatile stock markets are key concerns that corporate investors grapple with as they allocate funds for business and investments.
Even with cash to spare, it may seem more worthwhile putting money back into growing your business than spending time investing in equities or bonds.
Still, tough as it is, balancing funds for your business and for an investment portfolio is essential – if you want to secure a healthy financial future for your firm.
Here are three tips to help you become a savvy corporate investor:
For many business owners, their net worth – not to mention all their resources, expertise, and time – is tied up in their business. That means that there’s a concentrated risk exposure in one single company.
The problem is if their firm were to run into financial difficulties, they would not have any assets unrelated to the business to fall back on.
Smart business owners recognise that while it is indeed important to reinvest in your company to keep it growing and stave off the risk of insolvency, that is far from enough.
You also need to invest wisely in other companies through the stock market, as well as other assets such as bonds and real estate investment trusts. These can provide your business with a risk-adjusted return, as well as a buffer for your personal finances.
Rather than doubling down on your own business, investing in a diversified portfolio exposed to other unrelated industries can help you weather downturns in your own sector.
UOBAM Invest, launched by UOB Asset Management (UOBAM) is a smart tool that can help you balance your business and corporate investment objectives. Through a risk assessment and with your input on your investment goals and investment horizon, UOBAM Invest customises a portfolio of UOBAM unit trusts and global exchange traded funds, best suited to your risk appetite.
Research has shown that how efficiently a company manages its working capital will impact its overall profitability.
This requires entrepreneurs to plan well ahead to cover short-term working capital needs like wages, raw materials, and overhead costs, while allocating funds for longer-term projects such as building a new factory.
For instance, you may require a large chunk of money for a major project in three years’ time but leaving that cash in a bank account earning minimal interest would be imprudent.
Yet figuring out just how much money to invest in what kind of financial instruments to cover both your short-term and long-term goals is not an easy call, especially with the current volatile market conditions.
Why not tap on the power of digital technology to help you plan in the most optimal and convenient way?
In UOBAM Invest, the Portfolio Planner is a key feature that enables corporate investors to aggregate all their investment goals. Input your inflows, such as current and future contributions, outflows such as future spending and set priority levels for each goal. UOBAM Invest will then calculate the success probability1 of your plan. This way, you can monitor your investment goals and also review the viability of your plan.
Every business will no doubt encounter unexpected changes, from a sudden big order from a customer that stretches your resources to an abrupt cancellation of a shipment.
These surprises will affect your short-term cash flow needs or your long-term capital outlays, and in turn impact your investment portfolio.
That’s why only liquid assets are included in UOBAM Invest so that corporate investors can have the flexibility to invest based on their investment needs, goals and horizon. You can also adjust the level of your exposure for the different asset classes (e.g. cash, bonds and equities)2. For instance, you can choose to have more exposure to equities for a more aggressive portfolio, and meet your investment targets earlier.
Rest assured that UOBAM Invest will also alert you when you adjust your risk appetite beyond your risk category. After all, we designed UOBAM Invest with the best interests for your corporate’s investment needs in mind, and that will not change no matter how much business conditions do.
Find out more about UOBAM Invest, Singapore’s first robo-advisory service for businesses to manage their investments digitally.
Notes:
This document is for your general information only. It does not constitute investment advice, recommendation or an offer or solicitation to deal in Exchange Traded Funds (“ETFs”) or in units in any Unit Trusts (“Unit Trusts”, ETFs and Unit Trusts shall together be referred to as “Fund(s)”) nor does it constitute any offer to take part in any particular trading or investment strategy. This document was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The information is based on certain assumptions, information and conditions available as at the date of this document and may be subject to change at any time without notice. If any information herein becomes inaccurate or out of date, we are not obliged to update it. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of any Fund or UOB Asset Management Ltd (“UOBAM”) and any past performance, prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of any Fund and the income from them, if any, may fall as well as rise, and may have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in any Fund involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited (“UOB”), UOBAM, or any of their subsidiary, associate or affiliate (“UOB Group”) or distributors of the Fund. Market conditions may limit the ability of the platform to trade and investments in non-Singapore markets may be subject to exchange rate fluctuations. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the respective Fund’s prospectus. The UOB Group may have interests in the Funds and may also perform or seek to perform brokering and other investment or securities-related services for the Fund. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing. You may wish to seek advice from a financial adviser before making a commitment to invest in any Funds, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. Any reference to any specific country, financial product or asset class is used for illustration or information purposes only and you should not rely on it for any purpose. We will not be responsible for any loss or damage arising directly or indirectly in connection with, or as a result of, any person acting on any information provided in this document. Services offered by UOBAM Invest are subject to the UOBAM Invest Terms and Conditions.
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