What are the options for ltd co to invest unused funds in stock market

[Karimbo]

I need about £5K working captial in my business, and tend to keep around £20K additional buffer sitting in the bank account. I realised that for about 2 years I've always had £20 sitting in a savings account and never been withdrawn to current account for any purpose.

I am thinking do doing something a little bit riskier for more returns.

I've played around with personal funds on US stocks through robin hood and havd some good luck with timing the market, buying stocks that dip and then selling them after they surge. I know it's risky, I only do this with stocks that are good long term stocks. Not just punts.

I want to invest business funds into loads of stocks. What are the legal options available for doing this with company funds?

Also how do you value this in the balance sheet year on year. Do you enter the current market value of the stocks each year? I dont know if my accounting software (freagent) has anything like that, I'm sure there are journal entry options available.

 

[zomex]

I've played around with personal funds on US stocks through robin hood and havd some good luck with timing the market, buying stocks that dip and then selling them after they surge. I know it's risky, I only do this with stocks that are good long term stocks. Not just punts.

Anytime you buy a stock is it a punt. A good company or not does not relate to the stock price. Especially in the era of meme stocks and companies with huge valuations that do not produce a profit.

If you were wanting to use these funds to invest in the stock market (I would personally recommend going down the high interest savings route) it would be better to lower your risk with indexes, specifically ETFs for lower fees. Such as the S&P500 etc.

For my own stock investing I have 80% total in a single index ETF:

Vanguard Asset Management | Personal Investing in the UK | Vanguard UK Investor

www.vanguardinvestor.co.uk

It's a index like the S&P500 but instead of just the top 500 US stocks it's diversified with 3,600+ stocks from around the world. It's still 65% US invested but I like it a lot more than the S&P.

For the remaining 20% I do like to dabble in single stocks. I like banks, oil companies, gold miners.

 

[Karimbo]

Thanks for the feedback. I'm happy to take the risk. If I wasn't I wouldnt be in business and go get a job.

I am wondering more about the legalities of it. Whether I as the director can put company money into stock market.

For the record, I am the only director and only shareholder.

 

[zomex]

Thanks for the feedback. I'm happy to take the risk. If I wasn't I wouldnt be in business and go get a job.

I am wondering more about the legalities of it. Whether I as the director can put company money into stock market.

For the record, I am the only director and only shareholder.

I would also be interested to hear.

One thing I would also add is while that cash is in the business and you want to make use of it I've found that investing via a company is not tax efficient.

I had Bitcoin payments in the past which i held via my company. I ended up having to pay tax on the value gain and then tax again to pull the £ out of the business.

Personally you can open a stocks and shares ISA and invest £20k/year and pay no tax.

 

[Baines Watson]

Thanks for the feedback. I'm happy to take the risk. If I wasn't I wouldnt be in business and go get a job.

I am wondering more about the legalities of it. Whether I as the director can put company money into stock market.

For the record, I am the only director and only shareholder.

Legally your company can invest in stocks and shares as long as it is not the main business activity and such activity is allowed by your articles of association.

You will need to open a corporate investment account to do this with a broker, bear in mind different protection rules apply to such accounts and any gains made will be subject to corporation tax.

 

[zomex]

any gains made will be subject to corporation tax.

That's the killer right there.

That hit me holding Bitcoin in my company that was paid to me via clients. Never again would I do that.

I also had a £10k cooperate bond investment that I had for years. By the time I sold it the tax was so bad it was barely worth doing.

 

[Baines Watson]

That's the killer right there.

That hit me holding Bitcoin in my company that was paid to me via clients. Never again would I do that.

I also had a £10k cooperate bond investment that I had for years. By the time I sold it the tax was so bad it was barely worth doing.

Agree, before embarking on any corporate investments it would be best to assess whether it's better to pull excess funds out of the company and invest via a personal ISA from a tax planning perspective.

 

[Paul Kelly ICHYB]

If you do, not need the funds, why do you want to invest it to make more?

Speak to a financial advisor who might be able to offer better use for your money, e.g. taking it out of the business and putting it in a pension.

 

[Karimbo]

If you do, not need the funds, why do you want to invest it to make more?

Speak to a financial advisor who might be able to offer better use for your money, e.g. taking it out of the business and putting it in a pension.

Pensions just got nerfed on the Autumn Budget.

I'd rathe rrisk it with 105+ p.a. gains than losing value against inflation. I do need it in an emergency when I can sell the stocks and cash out for large orders if the situation ever arises. I pay myself wages and pension as it is. So I dont need to withdraw it out - as I may need to keep it in the business for a rainy day.

I have lookede into corpoerate brokers, a big issue with them is that they have monthly fees and transaction fees. Retail investment portals like robinhood are fee free and comission free on buying/selling stocks.

Unfortunatrely robinhood do not offer corporate accounts.

 

[WaveJumper]

Have a look at Trading 212 and you should defiantly trade or invest through an ISA

 

[Karimbo]

I'll look into it.

I hate how short the edit window is on this forum. 105 pa was supposed to read 10%+ pa in gains.

 

[WaveJumper]

https://www.trading212.com/

 

[zomex]

In the process of moving my ISA from Freetrade to Trading212. Can't complain with a free ISA.

Agree with your views on pensions. I know I will get a lot of hate for this but a pension in my opinion is much worse than an ISA. You get taxed heavily when it comes to taking it out. The rules constantly change regarding age you can start drawing. Most pensions and defaulted into high fee average investments.

ISA = Full control, no tax, invest in almost anything

 

[WaveJumper]

Ive said it before pensions are a mugs game, giving someone else your money who charges you for the privilege, never passes on the full amount of market gains. Then when you want to take it out you get stung again by the tax man. Put it in an annuity get shit returns and guess what those institutions end up keeping your lump sum they've been making a fortune on

Wish i had come up with that idea, its behind my list of wish I had "invented" the credit card system another great platform that screws both the public and business

 

[Karimbo]

Pensions are really designed for employed people to reduce their income tax. It makes sense to do it for high earners. If you're on high rate of tax, just put it into pensions, you dont pay income tax for putting money into pensions straight out of your wages. Sure you do pay tax on redemption but by the time you're a pensioner the tax rate will be lower.