You’re an entrepreneur and you’ve built up a cash reserve in your company, which you want to use as usefully as possible. In other words, you want it to generate a return. Perhaps you’ve already thought about investment, and that’s certainly worth considering. But how do you go about investing in practice as a legal entity?
What will your investment budget be?
You should never invest company money that you need in order to guarantee your business’s smooth operation. This is because investment generally delivers the best results in the long term (at least three years). So you should invest with a portion of your assets that you can manage without for several years. How do you identify that portion?
We can break a company’s resources down into 3 levels:
- Working capital to cover planned expenditure such as wages, payments to suppliers or loan repayments.
- Short-term reserves for unforeseen expenses and investments you want to make in the near future, such as new machinery or a car.
- Long-term reserves or structural surpluses that you don’t want to take out of the company at this point, but which you don’t actually need to guarantee operations or to fund planned investments.
Your company’s working capital will be held in a current account. You keep your short-term reserves separately. You might hold them temporarily in a time deposit account, for instance, or a combination of a savings account and a time deposit account.
As you will have worked out already, it is your long-term reserves that are most suitable for investment. You can invest them for a longer period. And you’d obviously prefer not to leave them in a savings account, where they are susceptible to inflation. You can secure a potentially better return by investing them.
How are you going to invest?
You can invest as a legal entity with KBC in various ways.
- Do you want to do it yourself? In that case, we will make sure the process is as smooth as possible.
- Or would you rather have the support of our experts? If so, we will give you personalised advice or monitor your company’s investments.
- Would you also prefer to leave the day-to-day investment decisions to specialists? In that case, you can invest straightforwardly in a fund, in which specialised managers take the investment decisions.
However you want to invest, KBC has a service to suit your company.