Personal Investment Strategies for Small Business Owners

By April 13, 2017 May 30th, 2019 Self Management Tips

Last Updated on May 30, 2019 by Dave Schoenbeck

personal investment strategies for small business ownersThere’s an all too common problem that exists among business owners today: they consider their business ventures to be the bedrock of their retirement strategies and as a result, many are unknowing – yet willingly – taking a risk by putting all of their golden eggs into one basket.

In fact, research done by the Employee Benefit Research Institute (EBRI) has shown that 48% of all working Americans fail to calculate how much money they will actually need for their retirement. Another survey suggests that 2 in 5 Americans say they will need $1 million in order to retire. More shockingly, 75% of Americans can expect to see their assets disappear before they die. I think it is time for business owners to get very serious about doing more to build a diversified portfolio

I don’t deny the importance of running and growing your own business. But this doesn’t mean you should ignore other opportunities to create personal wealth. Knowledge is power and can only add benefits to your financial situation. This article will discuss useful personal investment strategies for small business owners that everyone should know.

7 Personal Investment Strategies for Small Business Owners

1. Build an emergency fund.
Before you start investing, start saving.

We all face tough times. There’s no exception. Therefore, it’s essential to establish an emergency cash fund containing enough for at least 6 months of expenses to help weather unforeseen storms.

2. Take a risk tolerance questionnaire.
The purpose of a risk tolerance questionnaire is to determine the type of investor you are, particularly when dealing with risks. This, in return, will help you better manage your fear and avoid taking on too much risk.

3. Use an asset allocation model.
I highly recommend using an asset allocation model, which typically divides your investment portfolio into various asset classes, each having a distinctive risk-return characteristic. By considering the information about each asset class along with your risk tolerance, investment objectives, and available capital, you’ll be able to decide the right investments for you.

Though there are many asset allocation programs on the market, Exchange Traded Funds (ETFs) and mutual funds are usually better options than individual stocks.

4. Establish the scope of your involvement.
Decide beforehand whether you are comfortable having a professional handle your entire personal investment portfolio or if you’d prefer to remain more hands-on and work with an online advisor.

5. Implement a dollar-cost averaging strategy.
Dollar-cost averaging is a common and powerful personal investment method that requires an investor to take a fixed amount of money at regular intervals and put it into a particular investment over a long period of time. This can help you get into the habit of saving and investing on a smaller scale.

6. Rebalance your portfolio occasionally.
This strategy restores your portfolio and gives you an asset allocation mix. Rebalancing at least twice a year will guarantee that your portfolio does not overly favor certain asset categories over others, which, in turn, will help keep your investments aligned with your business goals and model.

7. Minimize taxes with your investments.
Investing does not come without taxes and hidden fees. From the very beginning, it’s important to learn how to manage and keep these fees under control. Otherwise, you might have to give up more than 30% of your profits. Be sure to speak with an advisor or your accountant to learn what you’re responsible for come tax time.

Don’t leave money on the table. Start considering your options and hop on the road to building personal wealth. By following these personal investment strategies for small business owners, you can make wise money decisions and achieve your financial dreams.

To learn more about personal investment strategies for small business owners, schedule a complimentary one-hour coaching session with me, Coach Dave. Please fill out my contact form to get started.

Dave Schoenbeck
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