In a recent post, I told you about the fact that I don’t attach much importance to income and net worth reports from financial bloggers and entrepreneurs who choose to share them with the whole world.

I simply don’t think they are relevant or useful to me. On the contrary, I might also risk being swayed into doing something rash with my money if I did follow these reports closely. It is human nature to want to do what others are doing, especially if it sounds like they’re getting everything right, while we, as readers, are losing out on some important opportunity.

A topic that is closely related is that of asking for financial advice online.

Since business and investing are two of my biggest passions and I write about those topics quite a lot on this blog, I also get a lot of requests for financial advice.

I wanted to put this post out there so that I can refer these people to it when they email me.

While I commend people for taking an interest in their financial situation and for the humility and courage to reach out for help to someone who they deem to be more knowledgeable or experienced, it is simply not a good idea for either of the two parties.

Let’s call the two parties as follows:

1. Aspiring investor
   Typically a young person who wants to grow his wealth and possibly aim for financial independence; or someone nearing retirement with a lump sum to invest.
2. Experienced investor
   Typically a finance blogger, startup founder, venture capitalist, etc.

The first important thing to consider is that every single person is different in his capabilities, interests, family situation, etc. We all live incredibly complex lives intertwined with those of our family and people close to us, as well as our jobs or businesses, not to mention the countries and economies we live in.

The best way for an aspiring investor to not lose money and make long-term profits is to educate himself as much as possible. This can be done in various ways, including reading blogs of experienced investors, reading educational books, going to conferences, and myriad other ways.

I stress that it is of paramount importance that you read as much as possible, and adopt a skeptical attitude. When you feel that you know enough to make your first investments, start small and give the investments some time to see if you were right in the first place, or whether you have further learning to do.

An ethical seasoned investor will never dish out financial advice. They know that it is not responsible to tell anyone where to invest their money without spending hours studying their financial situation. That is a full-time job, one that is performed by a financial advisor.

If you want to invest your money and you don’t want to spend a ton of time learning about investing, the second-best thing would be to go to a good financial advisor and let him guide you. You wouldn’t ask for health advice online if you are sick (I hope), so do yourself a favor and pay someone to help you with your financial matters if you think that you need this help. It is far better to invest some money to get a professional’s advice than to invest irresponsibly and lose your money later.

I hope that this post helps explain why I don’t give financial advice. All I can do is write about my experiences and opinions, and the best thing you can do is to read those articles as part of your overall journey in educating yourself about personal finance, taking small steps and thinking twice before taking action.

This is a long journey and the most important thing in investing, as Warren Buffet says, is not to lose money. If you manage to avoid losing money, you’ll already be ahead of most people, so don’t feel pressured by what you read or what people say. More importantly, do not let this push you into making speedy decisions to avoid the so-called fear of missing out (FOMO).

To wrap things up, I feel privileged and honored when people email me to share their financial situation or investing experiences, however, please understand that it would not be in your best interest if I were to give you advice on your financial matters.

As always, your views are very much welcome.

What to do instead

If you want to learn how to invest and manage your money in a better way, I suggest doing the following:

• Read as many books on the topic as you can.
• Network with other investors and find masterminds of like minded people.
• Get coached and mentored by an experienced investor. My friend Shlomo Freund offers such a service, so check that out.

As an owner of a successful business, you will sooner or later amass a good amount of retained earnings in your business.

Retained earnings are what remains of the net profit after all dividends to shareholders have been issued. These retained earnings are usually kept in the business to re-invest into new products or expansion. However, even after those are taken care of, there might still be considerable funds sitting idle in bank accounts, and that’s almost never good, as inflation will eat away at the real value of those funds.

The key to maintaining the real value of those retained earnings, is, of course, to find stable low-risk investments with high liquidity.

Here are my top places to invest retained earnings:

YouHodler – This is a platform where you can lend money to borrowers who put up their crypto as collateral, while you earn a yearly return of up to 9%. You can withdraw the money at any time, giving you full liquidity.

If you are ready to take higher risks, you could invest some of your company’s retained earnings into pure P2P lending platforms. I would suggest using systems like Mintos autoinvest or Bondora’s Go and Grow to maintain a high degree of liquidity.

Real estate investments can also provide relatively safe places to park a company’s money, however, they can be more illiquid, especially if the platforms don’t have a great secondary market.

Tax Benefits of Investing Through the Company

Investing your company profits rather than withdrawing money as salary or dividends can offer significant tax benefits. This strategy allows you to take advantage of lower corporate tax rates in certain jurisdictions and defer personal taxation on investment returns.

In many countries, corporate tax rates are lower than personal income tax rates. For example, Malta has an effective corporate tax rate of just 5% in certain cases after tax refunds, making it an attractive destination for businesses looking to minimize their tax burden. By reinvesting profits within the company and compounding returns, you can leverage these tax advantages to maximize your overall wealth.

By keeping the profits within the company and investing them, you can defer taxes on the returns generated by those investments. This strategy enables you to compound your returns more effectively, as the deferred tax liability can be reinvested for further growth. When you eventually decide to withdraw profits as dividends, the taxes due on those dividends will often be lower than the taxes that would have been levied on a larger salary or regular dividends.

What are your thoughts on this? Do you have any other ideas on investing company retained earnings?