Every business generates surplus cash at some point. But the key question is: where should a business owner invest this money? Digital Masterjee, Professor Vishal Thakkar, shares strategic insights on how to invest surplus cash effectively.

Key Takeaways:

• How to invest surplus money wisely.
• Strategies to grow business funds while ensuring safety.
• Keeping surplus money accessible when needed.

Best Investment Options for Business Surplus

A business owner must choose investment options carefully. Here are some popular avenues for parking surplus funds:

1. Stock Market – Invest in blue-chip stocks for long-term growth.
2. Real Estate – Buy commercial or residential property for appreciation.
3. Mutual Funds – Choose short-term or long-term funds based on goals.
4. Fixed Deposits – Secure funds with guaranteed returns.
5. Bond Market – Invest in government or corporate bonds for steady income.
6. Money Market Mutual Funds – Park cash for short-term gains.

How Businesses Strategically Invest Surplus Money

Example 1: Weekend Cash Investment

Many businesses collect cash from the market every Friday. Instead of keeping it idle, they invest it in the money market on Friday afternoon and withdraw it on Monday morning. This earns a 4.5% – 5.5% annual return on otherwise unused funds.

Example 2: Investing for Future Purchases

If a business is saving to buy machinery in the future, the best strategy is to invest the surplus cash in mutual funds or top blue-chip stocks. This ensures growth while maintaining safety.

Example 3: Short-Term Investments for Payroll

If money is reserved for next month’s salaries, it can be invested in short-term mutual funds. These funds allow withdrawal within 24 hours, offering 5.5%-6% interest returns without risk.

Massive Action Plan for Smart Investments

To make the best investment decisions, business owners must consider three fundamental factors:

1. Investment Objective

Clearly define the goal: Is the aim to grow wealth or keep it safe while earning returns?

2. Risk Appetite

Assess how much risk the business can take on surplus cash. Low-risk options like bonds or FDs ensure safety, while stocks offer higher returns with volatility.

3. Time Horizon

Decide on the investment duration:

• Money for salaries requires short-term investment.
• Funds for long-term assets like machinery can be parked in higher-return investments.

Final Thoughts

Smart investment strategies set successful entrepreneurs apart. Business owners should never leave surplus cash idle in a bank account. Instead, they should invest wisely based on objectives, risk tolerance, and time horizon. Making informed decisions will help businesses maximize returns while keeping funds secure and accessible