Too many business owners are unaware of the potential opportunities to be found in investing. With cash held in business current accounts earning very little in interest, a lot of SMEs are unaware that they could be searching for better returns elsewhere.
Ian Durrell is the Compliance and Development Officer at Back Office Support Solutions, which trades as Ask the Boss. The business acts as a financial partner to small and medium-sized enterprises, handling all things from annual accounts, confirmation statements, payroll, cash flow and even virtual FD work.
Ian’s role within the organisation is to run all the compliance operations, to make sure that the business’ licences are up to date, and to ensure the money laundering training is all taken care of.
We recently sat down with Ian to talk about his investing journey and how he’s using InvestEngine to make Ask the Boss’ business cash go further.
InvestEngine: Hi Ian. How long have you been investing?
Ian Durrell: Personally, over 30 years. As a business, probably for about the last three years.
How much did you know about business investing?
I knew it was available. I thought it was the sort of thing that was really only open to larger businesses, because some businesses make it their business to invest. So, I thought I would try with our existing bankers, who were unable to help.
I then did some research and found that there are facilities out there enabling businesses to invest their spare cash, and InvestEngine was one of those.
How much do you invest as a business?
Not so much payroll, but definitely money that we’ve budgeted for VAT, corporation tax, and any other spare cash that we have that isn’t going to be needed in the short term.
What do you invest in as a business?
Well, it’s not my money, it’s the business’ money, so I have to respect that. As a result, we choose very broad market ETFs, giving exposure to lots of different areas. Mainly US, UK and worldwide.
Also, the ETF that offers the interbank overnight rate facility too.
Was it money market funds that attracted you to InvestEngine?
No, it wasn’t and I’ve only recently added it to the portfolio. I was able to take a calculated risk a year or two ago – I knew that the stock markets around the world were on the low side, so I took advantage of that on the understanding that there’s probably a good chance that they’d rise above those low levels.
Now, some of those markets you could argue are overheated. So, the overnight rate seemed like a good place to start putting some of that cash as well to even out the risk.
What do you like about InvestEngine?
For starters, it’s an incredibly simple tool to use, both online and as an app. The autoinvest facility is a great tool to have there – it’s a simple thing but it’s one of those things that you don’t have to think about once you’ve made the decision.
You can always rebalance that portfolio any time you like, but the simplicity and the autoinvest facility make it a very worthwhile app.
See what investing could do for your business cash.
Capital at risk.
How has investing changed your business?
Well, it’s made everyone more aware of the opportunities of investing spare cash. Also, it’s increased our revenue as well.
What advice would you give to other businesses?
You should earmark and invest your spare cash if it’s going to be sitting on deposit in a current account getting minimal interest. If it’s truly spare cash that is not required over a certain period of time, then looking at some of the opportunities in InvestEngine or any other areas you can put that money would be worthwhile.
How did you learn about investing?
My early career, out of university, was in financial advice. So I had an idea about investing. It was drummed into me from a young age about the benefits of saving and putting money aside, too.
So, with that philosophy over the last 30 years, and the exposure to the information you can get access to online for example, was something I became aware of and understood, and it seemed like a very sensible thing to do over the long-term.
How do you manage your business’ risk?
Well, you have to calculate your risk, and you’ve got to remember it isn’t your money. That money should be going towards other employees, for example, in your business.
I can’t speak for every business as every business is structured differently, but you need to do your own risk analysis and decide what you want to do with any spare cash, if you have any.
How did you consider fees when looking to invest?
With the world we live in at the moment, and all the different financial tools that are available, I wanted something that was low cost and low risk.
The ETF range that InvestEngine had access to made that a very easy decision to make, because there are lots of very low-cost, broad market funds. Rather than trying to beat the market, just become part of the market.
How do you choose your ETFs?
Low risk, low cost and broad market – so, worldwide indexes like the S&P 500 and the FTSE 100, some of the big markets. I don’t look at any emerging markets or anything like that, but low cost, broad exposure.
How important is an investing partner to accountants?
It can be very useful. If you have a number of clients who also have some spare cash, then it makes sense that they get as much out of that spare cash as they can.
If they can find a partner to invest with then that would, again, be an additional revenue stream. It’s making your money work for you, rather than sitting on deposit doing very little work, within a business current account.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.