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Investing surplus cash to build wealth

After all your hard work there will be a time when your business comes of age and starts to build wealth. This is a stage when you can actually bank some of your profits and use the excess funds to invest for both the future of your business and your own financial future.

It’s an exciting period of growth and you’ll need to make some decisions about where to best place your money.

Getting started with investing

There are many different ways to invest and the solution you choose will depend on your individual situation: how much you are investing, the degree of access you need to your money and what your financial goals are, both professionally and personally. It’s also important to get clear on the level of risk and return you want to be exposed to.

Goals and strategy

Even for experienced investors it’s a good idea to consult with a financial planner and choose your business investment strategy carefully. Most people have a mixture of short-term (1-3 years), medium-term (3-5 years) and long-term goals (5+ years), which all require different investment solutions.

Investment choices

The most common types of investments used by Australians are shares, property, bonds and cash – also called assets. Your investment strategy will determine which of these asset classes you include in your portfolio, and how much of your budget you assign to each. There are also products such as managed funds and wrap platforms, which offer convenience, control and flexibility with your investments.


All investment involves risk. Diversification is a way of managing the risk associated with investing.  It involves spreading your money across different asset classes and investments, so as to limit the impact of negative events on any one asset class or investment. Diversifying across asset classes protects you against underperformance in any one asset class. Your asset allocation will reflect how cautious or aggressive your investment strategy is.

Other considerations

When it comes to selecting specific investments, there are many things to take into consideration.  Some of the main ones include:

  • Risk and return
  • Liquidity
  • Tax

Risk and return

The reason we invest is to seek a return on our money.  However, as we have seen, investing comes with risk.  Choosing your investment strategy should involve deciding how much risk you are comfortable with and what kind of return you would like to achieve.


This refers to the ability to convert an investment to cash.  Again factor this in, including the ease and speed of access to your investments when you put together your investment strategy. Also be aware of what fees there may be from exiting your investment.


Investing can have complex tax implications. For example, if you are investing in shares then you can be liable for tax in two ways.


  • Dividends are subject to income tax at the investors marginal tax rate
  • Some dividends include franking credits, which can reduce the income tax payable.

Capital Gains

  • Capital Gains Tax (CGT) is payable on any capital gains realised by selling shares
  • The CGT payable can be reduced by 50% for investments that are held for 12 months or more.

Again, get sound financial advice about your investment costs and liabilities before you choose an investment solution.

How much do I need to get started?

In some cases you can begin investing with as little as $1000 depending on the product. What’s more important is that you only invest the amount of money you can actually spare, so good to put together an investment budget. Again it’s good to talk to a financial adviser to cover areas such as tax considerations, fees and exit costs before you commit.

Minimising your risk

Some types of investments carry lower risk than others. Term deposits are available if you’re looking for a good rate with little risk.
You can put your money away for terms of between one month to five years and the interest rate is fixed. The pleasant catch is that you can’t access the money, or add to it, before the end of the term, unless you’re willing to pay an interest penalty. With terms as short as a month, term deposits can be used to park GST money.

You should compare the rates between a term deposit and a cash reserve account and decide if the rate difference is worth the access.

Terms for farmers

Westpac also offers a special deposit account for farmers.
The Farm Management Deposit (FMD) scheme provides tax concessions and ways to manage risk. It works like a term deposit, with no bank fees, competitive interest rates and is potentially tax deductible. It is designed to smooth out the highs and lows of seasons and cycles agribusinesses face. There are no bank fees, offers competitive interest rates, and it’s potentially tax deductible.

Superannuation and your business

Your superannuation is possibly one of the biggest investments you will have. Putting extra money in as a salary sacrifice as well as after-tax income (non-concessional contributions) will grow your retirement funds and can minimises your income tax. There are limits to respect here, so speak to your adviser to choose the best strategy for you.
And if you have a family business and want to minimise tax and maximise growth, then a family trust structure is one to look into. This is more complex and you’ll need to talk to an accountant and lawyer before establishing the trust properly.

Things you should know

Deposit Accounts for Business Customers Terms and Conditions (PDF 955KB)

To be eligible to apply for Business Cash Reserve savings account, your business must be registered in Australia.

24/7 access via Phone or Online Banking, is subject to system availability.

General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.