As an entrepreneur you probably already have your head screwed on right and know a thing or two about business and finances. You will have written out a business plan before starting out in the business world, or barring that, you will have created a discernible outline of how you would like to run your business as it starts up. This is made particularly difficult as a teenager because as much as you have the entrepreneurial spirit, it might be difficult to organise the correct resources to make your vision a reality. This requires either asking your parents for money, applying for bank loans while you have no surety or other assets, or applying for government youth development schemes.

Starting Your Gold Investment Journey

So, let’s say you manage to get all of those things right and your pet grooming business or your house-sitting business begins to boom. Maybe you hire a few friends to help you and you’re all happy because you’re earning an income and able to do things for yourselves. You will then need to invest in more equipment if applicable, a bit of skills development training, and perhaps marketing. Few small business owners ever consider saving some of their income in the form of investments that are not directly tied with operations. So, most money is sunk back into the business, and there is no form of out-of-business safety net. This is erroneous on two fronts:

  1. If the business or anything surrounding the operations thereof ever tanks, then you will incur a large amount of loss because you were essentially operating using cash flow. It was a simple case of money-in, money-out.
  2. The business needs to have assets of its own that are not tied to operations and which can accrue interest. This is because equipment depreciates and will have to be upgraded at intervals but a long-term investment has shown, throughout the years, to pay more even as the years press forward.

Investment Types, Investment Vehicles, And How To Choose

To avoid confusion, there are many types of investments and investment vehicles. So, real estate is a type of investment, but something like an ETF or mutual fund (although also types of investment) are considered more as investment vehicles. This is because an investment vehicle can be focused on a specific asset class (investment type). So, you can find commodity-led ETFs, or mutual funds that are solely focused on owning shares in real estate companies and building contractors.

As an entrepreneur, you will want to hire a financial advisor who will be able to help you find an investment strategy that works well for your business. Now, on your initial investment run, even if you have the highest personal risk tolerance of anyone in your type of business, the most cautious action would be to choose a low-risk investment strategy. Remember you can always augment this strategy over time as you become more ready to risk your funds. But even then, you shouldn’t’ put all of your funds into one type of vehicle or investment type. A diverse investment portfolio is always advisable.

How do you start investing with a low-strategy risk tolerance? One of the easiest ways to start investing incrementally in something which has historically been low-risk is to invest in gold mutual funds. A mutual fund will allow you to have a debit order every month which will build the number of shares you own in gold as a commodity. A mutual fund is a better option than an ETF in this case because an ETF trades mostly based on the differences in movement in the price of gold. Although a mutual fund does account for the differences in pricing of gold, as a unit trust feature, it considers more intricate aspects of the gold trade, including specific equity in gold mines or global gold mining operations by a mining group.

Think Of Gold As One Of Your Business’s Money Safety Nets

In South Africa, you have your choice of whether to invest in junior, mid-tier, or large gold miners through investing in a mutual fund. You will be exposed to a commodity whose stability has been such that it has repeatedly beat the value of fiat currencies over the years. You’ll benefit from long-term balanced trade, gain interest income, and protect a portion of your business’s money from forfeiture etc. if you set the investment correctly with a certified financial service provider (FSP).

The goal should be to increase the interest-accruing assets linked to your business so that not everything is linked to your business’s material conditions and day-to-day running. Because material conditions tend to change much quicker than a long-term investment. An investment of that nature is geared towards allowing you to build capital income at above-bank-savings rates, while also ensuring that you can re-inject a portion of that money back into your company at a later date without losing out on much. Again, this is dependent on the interest income from your investment, but in general gold increases by thousands of dollars yearly.