How should I invest my company's funds?

[bkidiot]

I run a freezone company in the UAE.

My business has high profit margins and few overhead costs.

Given corporate tax regulations, I'm cautious and taking a "reasonable" salary. The rest will be paid out as a dividend.

So the question is: what do I do with the funds that I can't withdraw and are sitting in my business account? We're talking about ~AED 100K per month.

My business bank offers term deposits, but the rates are low.

Does it make sense to:

- Open an IBKR business account, hold cash and earn a better rate? Buying ETFs probably doesn't make sense due to the short time horizon?
- Convert to the funds to crypto and place them in a protocol to earn double-digit interest?
- Something else?

For context, I don't plan on staying in the UAE long-term, potentially another year or two. My preference is to keep the funds in fiat. But I'm not comfortable holding 7 figures with my business bank.

 

[JohnnyDoe]

Before investing into any financial product you should invest in some financial education. Otherwise you will become another puppet of banks/brokers.

 

[bkidiot]

Before investing into any financial product you should invest in some financial education. Otherwise you will become another puppet of banks/brokers.

Although I appreciate the sentiment, this is not a helpful comment.

It's one thing when you can plan for the long term and you have a "permanent" home base, have an idea of what your future needs are... whereas when you're looking at the short time with a few unknowns, it's more difficult (at least for me).

 

[JohnnyDoe]

It's one thing when you can plan for the long term and you have a "permanent" home base, have an idea of what your future needs are... whereas when you're looking at the short time with a few unknowns, it's more difficult (at least for me).

Good planning is the one that is resilient to, or even benefits from, the unknown.

 

[bkidiot]

Good planning is the one that is resilient to, or even benefits from, the unknown.

This I agree on. But I'm uncertain as to how... that's why I'm on here asking for suggestions.

Given the information provided (happy to share more if there's something specific that would help), what would you do?

 

[JohnnyDoe]

Given the information provided (happy to share more if there's something specific that would help), what would you do?

What I’ve been doing for some time: build an income generating IBKR portfolio, use the cash for expenses and for buying btc and if some larger unexpected expenses come up take advantage of the IBKR credit line.
Don’t keep in any bank more money than what you need for the next 7 to 30 days, split the amount between many banks.

 

[daniels27]

- Open an IBKR business account, hold cash and earn a better rate? Buying ETFs probably doesn't make sense due to the short time horizon?
- Convert to the funds to crypto and place them in a protocol to earn double-digit interest?
- Something else?

@JohnnyDoe with all due respect, but this does not sound much like investing, rather just keeping the money. I mean holding cash at IBRK is much lower than having shares there which in turn is much lower than @wellington's cryptos.

@bkidiot How about buying some index funds if you are risk averse?

 

[bkidiot]

@JohnnyDoe with all due respect, but this does not sound much like investing, rather just keeping the money. I mean holding cash at IBRK is much lower than having shares there which in turn is much lower than @wellington's cryptos.

@bkidiot How about buying some index funds if you are risk averse?

I'm open to both options: keeping the money and/or investing.

It's important to note that this is company funds, not personal. The time horizon is also something to consider. For instance, the dividend is due to be paid out in a few months. Does it make sense to buy an ETF, index fund for 3-4 months, then sell, and pay out as a dividend?

The path to invest via IBKR would be convert funds from AED to USD. Transfer to IBKR and invest. A few months later, sell and transfer to business account, and then payout as a dividend. Fees on fees so it's something to consider, and every time there's a transfer, there's the potential for "issues".

 

[daniels27]

It's important to note that this is company funds, not personal. The time horizon is also something to consider. For instance, the dividend is due to be paid out in a few months. Does it make sense to buy an ETF, index fund for 3-4 months, then sell, and pay out as a dividend?

Sure, maybe index funds. Or @JohnnyDoe's IBKR portfolio. You can always pay out the dividends on paper and then loan them back to the company. This way, you have more flexibility in payouts.

The path to invest via IBKR would be convert funds from AED to USD. Transfer to IBKR and invest. A few months later, sell and transfer to business account, and then payout as a dividend. Fees on fees so it's something to consider, and every time there's a transfer, there's the potential for "issues".

I think you probably will get better exchange rates when converting at IBKR. Please check.

 

[diatessaron]

Buy crypto.

 

[PhantomOf ThePits]

Sure, maybe index funds. Or @JohnnyDoe's IBKR portfolio. You can always pay out the dividends on paper and then loan them back to the company. This way, you have more flexibility in payouts.


I think you probably will get better exchange rates when converting at IBKR. Please check.

Wio Bank has extremely tight USD/AED spreads 3.6715/3.6730

Banking wise it's also better to send USD to IBKR
As otherwise if you send AED to IBKR, they sometimes have issues with their corresponding banks and AED wires get stuck