Being a small business owner can come with its fair share of obstacles. Your mind may be riddled with concerns for employees, office space, and those pesky government forms that come around every April. After all is said and done, there is often not much thought given to investing.
But,investing is vitally important, and even more so for the business owner. Worse, only 9% of millennials see themselves as investors. With this growing trend, it is imperative that the business owner of any age pays close attention to the importance of investing. In fact,Global Resources Reviews list investment as one of the most important habits a business owner can get into. So, to help you along this path, below are some tips and ideas for investing well.
Allocate
Numerous studies show the single most important factor to help ininvesting success is asset allocation — the mix of stocks, bonds and cash in a portfolio. Over the long term, stocks have earned approximately ten percent a year. This is enough to double your money every seven years. But stocks can be quite risky for the money you will need in the next five to ten. The bulk of that money should go into bonds, which are less fickle, averaging returns of around 5 percent a year. While this is obviously less than stocks, it is a reliable and effective option.
Cash, like bank savings and money-market funds, is very safe but generally earns nothing once inflation has taken its course. It is often advised that one keeps about six to twelve months of cash in an account, with the remaining portion being allocated to bonds. Of the remaining holdings, the bond portion should equal one’s age, i.e. 50 percent for a 50-year-old. The rest of your portfolio should be in stocks.
Spread it Around
People who own businesses or have large stock positions in companies they work for often havetoo many eggs in one basket. By diversifying — spreading money among a wide variety of holdings — you reduce overall risk, since some holdings may be up while others are down. This is a smart habit to get into, and one that can help steady and your funds and relief some of your stress of storing money.
Remember,investing is a marathon, not a sprint. Often, people are scared off by the idea of investing, or they get out of the investing game and never return or come back too late. It’s important to keep in mind that, though investing may seem as though it is not paying off, following the tips shown above, and being wise with where you put your money can result in investing becoming a huge asset to you, as a business owner.
