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Forum
-> Household Management
-> Finances
amother
OP
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Sun, Nov 22 2020, 6:05 pm
If a wholesale/ retail business has profit how should they invest the profit?
Into his business to make it grow,
Stocks, bonds, etc,
Real estate,
Invest in another business?
If they can choose more than one option what order should it be....
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amother
Bisque
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Sun, Nov 22 2020, 6:23 pm
If the business is growing and has potential to grow more, invest 1/3 in the business. Keep 1/3 in cash reserves. I don't know anyone who is investing right now, but if you do, speak to them.
Real estate is a general term. This year, thousands of businesses closed and will never reopen because of COVID. A commercial property with bankrupt tenants or no tenants is unwise. Likewise, many people lost their jobs and are no longer paying rent. So don't just buy any property, because property values are dropping and tenants are hard to find. Look for a residential property where the tenants are paying rent.
Stocks is a general term. This year, many stores and restaurants have gone out of business or filed for bankruptcy. Stay away from retail stocks. The economy was boosted because of payouts from the government for COVID, but that is unlikely to continue forever. We are expecting a further pullback of the economy even as the vaccine rolls out. Amazon did very well, but we are pulling out because we expect the stock to dip as the economy struggles.
Tourism is down, and so are many businesses associated with it. Airplane stocks are bad right now, as well as cruise line stocks. We don't know how long the vaccine will take to roll out, and how long it will take the economy to recover.
In summary, I think that investing in stocks is a good idea, but not for another year until we see which stocks survive.
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