{"id":25602,"date":"2017-01-03T17:00:51","date_gmt":"2017-01-03T21:00:51","guid":{"rendered":"http:\/\/www.andysowards.com\/blog\/?p=25602"},"modified":"2017-01-03T17:00:51","modified_gmt":"2017-01-03T21:00:51","slug":"why-entrepreneurs-need-special-approach-to-investing","status":"publish","type":"post","link":"https:\/\/www.andysowards.com\/blog\/2017\/why-entrepreneurs-need-special-approach-to-investing\/","title":{"rendered":"Why Entrepreneurs Need A Special Kind Of Approach To Investing"},"content":{"rendered":"

Ask most financial experts<\/a> out there, and they\u2019ll tell you about the importance of building a \u201cwell-diversified portfolio\u201d of investments. But is that really the best approach for entrepreneurs? Entrepreneurs, especially those in high-growth businesses, often have to take a different strategy, one that\u2019s a little more nuanced. <\/p>\n

It’s highly likely that entrepreneurs have an investment portfolio that\u2019s heavily skewed, compared to the average investor. Business owners often say things like \u201cmy business is my retirement strategy\u201d meaning that they are heavily reliant on assets most closely associated with them. On the one hand, this is a good thing since they always know the state of their own investments. But on the other hand, it can be scary, especially if you don\u2019t have a big appetite for risk. <\/p>\n

Here are some principles for investing for entrepreneurs. <\/p>\n

Build Yourself An Off-Limits Portfolio<\/h3>\n

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\nFlickr<\/a><\/em><\/p>\n

Entrepreneurs are often desperate for cash<\/a>, and so having a big reserve of liquid assets in a portfolio somewhere can prove to be a significant temptation. Many entrepreneurs end up doubling down on their companies, dipping into their wealth whenever their businesses start to get into trouble and annihilating their wealth in the process. <\/p>\n

Keep an off-limits portfolio of assets, one that you can\u2019t get your hands on immediately. This will help you plan your business finances better in the future and incentivise you to allow your business to fail if it is clear that it isn\u2019t making any money. <\/p>\n

Diversify Away From Your Core Business<\/h3>\n

Diversifying for entrepreneurs is slightly different from that of the average investor. Regular investors chooses to diversify to the point where they have reduced their risk to that which is inherent in the system. But entrepreneurs often have such lopsided portfolios<\/a> that doing this isn\u2019t enough. Instead, their other investments are more like a counterbalance to their business: when their business assets start declining in value, their other investments go up. <\/p>\n

Seeking out investments which move in the opposite direction to your company and industry is a good idea to protect your wealth. This could mean trading commodities<\/a>, trading currencies, or finding an industry that moves counter-cyclically to your own. A good example might be to invest in a commodity to like gold if you are a jeweler. A hike in gold prices will harm your business overall since fewer people will be able to afford gold. But increases in the gold price will mean big business for gold stocks since mining operations will once again be profitable. <\/p>\n

Build A Cash Cushion Immediately<\/h3>\n

\"raise-funds-for-business\"<\/a>
\n4 Realistic Ways To Fund Your Small Business<\/em><\/p>\n

A cash cushion<\/a> is a luxury that most startups can\u2019t afford. But once your business is up and running, it\u2019s worth holding back a bit of money. The reason for this, according to Inc magazine, is so that you have a store of wealth you can use to take advantage of new investment opportunities as they arise. This could mean investing in the early stage of a house price boom<\/a>, or it could be investing in new technology to make your own business better, once that technology becomes available. <\/p>\n","protected":false},"excerpt":{"rendered":"

Ask most financial experts out there, and they\u2019ll tell you about the importance of building a \u201cwell-diversified portfolio\u201d of investments. But is that really the best approach for entrepreneurs? Entrepreneurs,<\/p>\n","protected":false},"author":1,"featured_media":25606,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[109],"tags":[5891,4906,696,1067,5994,5484,5969,5491,5482,5486],"yoast_head":"\nWhy Entrepreneurs Need A Special Kind Of Approach To Investing<\/title>\n<meta name=\"description\" content=\"Ask most financial experts out there, and they\u2019ll tell you about the importance of building a \u201cwell-diversified portfolio\u201d of investments. 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