You’ve heard it all before, run of the mill financial advice – diversify, make time work for you, and embrace stock markets. For most investors, those are the core pillars of any investment strategy. However, for business owners that is only true up to a point. As you have different circumstances, you need to invest accordingly.
That assumes that you are investing at all and haven’t fallen for the old misconception that your business is the only investment you will ever need. While it’s understandable that your business is your pride and joy, you need to remember that you should use it as a vehicle to extract profit and build investments separate to itself, as the chances that it will be able to provide for all of your needs through retirement is highly unlikely.
If you’re new to investing, or just looking for some guidance, you will definitely find the tips below useful!
1. Be conservative. It’s already clear that you don’t live like a typical wage-earner – and when it comes to investing, you certainly can’t act like it either. Your salaried peers, even at the same age, are going to be more aggressive in their investments. Your business is an investment in itself, and as it is hard to diversify within a company, it can be quite a risky investment at that. Although times may be good now, you can’t be certain they will be forever. With your portfolio you may want to consider being more bond-centric over equity-heavy, as this will help balance against the riskier investment that is your business.
2.Remember to save. It’s almost a cliché for small business owners: you take every last penny in your pocket and invest it right back into your business. But you need to remember that a return on investment from your business is far from certain. Investing solely in your business is the epitome of anti-diversification, so it’s always smart to spread your investment across different assets to help spread out the risk you’re holding.
3. Don’t fall in love with your own expertise. One common mistake that entrepreneurs make when investing is investing too heavily in the industry that their business is in. They feel that because they know that sector so well, they stand a better chance of success. This is far from guaranteed. While some sectors certainly can sometimes outperform the FTSE100 or S&P, it’s also important to remember that the reverse can also be true. Always keep in mind the banking sector in 2008, or the tech industry in 2000.
At Sovereign Wealth in Market Harborough, we specialise in providing advice to business owners across Northamptonshire and Leicestershire, guiding you towards an investment portfolio that is suitable for you. We offer access to a wide range of portfolios and investment opportunities, along with a deep understanding of tax rules and wealth structuring, to help give you the peace of mind that you are investing with confidence.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
If investing is something that are considering, we would be happy to help. You can call us today on 01858 791182 or get in touch here.
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We work with many local business owners and directors across the Midlands, helping them and their families to become financially independent.
Whether you are a startup looking to scale or a seasoned business owner planning your next journey, we will take the time to understand your objectives and plan a course of action.
You can call us on 01858 791 182 or email us at the link below.Contact Us