Business Owners

Business Investment Plans

A business may have cash reserves that are not earmarked for any specific purpose and would like to invest these reserves in a diversified portfolio in order to ensure capital appreciation, so that should they be needed at some future date the cash reserves will not have been eroded by inflation.

Investing the cash reserves through an endowment or other suitable investment vehicle is an ideal way of ensuring capital appreciation in a tax efficient manner.

Why is it important from the business’s perspective to have an investment plan in place?

The effect of inflation can result in cash reserves losing their value over time. A concern may also be that while there is a need to diversify the investment it is essential to guarantee a minimum return on the investment.

It may also make sense to invest outside of the business, as it can then diversify its risk and uncouple the rate of growth on this particular investment from the rate of growth in the business.

The investment may be used as security, if necessary, for example, to finance other projects or the expansion of thebusiness

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