Entrepreneurs are no strangers to risk. They know what it’s like to put their own skin in the game, whether it’s through sacrificing their own time, effort, or resources.
When a startup succeeds, the payout can be significant. While turning an idea into a profitable business is the epitome of entrepreneurial success, though, the story doesn’t stop there. Business owners still have to decide what to do with their hard-won gains.
Here are a few suggestions for ways modern entrepreneurs can begin investing in a rapidly-changing world.
Do Your Research
Rule number one with investing is to always do your research. Wondering about a particular stock? Read up on the company behind it before you spend a penny. Thinking of working with a financial advisor? Study how to choose a good one.
No matter what stage you’re in or activity you’re considering, always research first. Even if all this accomplishes is helping you familiarize yourself with the topic, it’s worth it. Research is ground zero for good investing.
Look for Alternative Investments
As you invest, it’s easy to start with safe things. Set up a 401(k) for the long term. Buy ETFs (electronically traded funds) to spread out your risk.
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Once you have a solid base, though, you want to look further afield for some higher-risk long term options. These alternative investments include everything from real estate to cryptocurrency, peer-to-peer lending, NFTs, and more.
Some investors struggle with investing in crypto because there is a lack of education in the cryptocurrency space. However, certain companies are growing that aim to help investors feel more informed about investing in crypto. For example, Red Swan CRE is aiming to educate crypto holders to invest their volatile crypto holdings into investments that are more stable, like real estate, through real estate tokenization. This is an innovative way to make real estate investing more accessible while also ensuring your crypto is invested in a real asset with the ability to generate income. It also allows real estate owners to create liquidity by putting their real estate assets on the platform thus obtaining cash that is needed versus having large investments tied up in the long-term.
Blockchain technology opportunities like this are becoming increasingly available for both investors and owners in real estate.
Diversification has always been a wise approach to investing, especially when it comes to early retirement. All that means is that you avoid doing too much of your investing in one area.
This can happen in two ways:
- You only choose one or two investment options.
- You choose several options but put too much money into one or two areas.
Either way, an unbalanced portfolio is a bad idea. There are many different forms that a balanced portfolio can take. Choose one that fits your proclivities and risk tolerance and then check in regularly to see if you’re following the guidelines.
Decide What Kind of Investor You Are
As you get used to your options and what investments you gravitate toward, start to think long-term. Specifically ask yourself, what kind of investor are you?
If you enjoy the thrill, you may want to study day trading and get in on the action on a regular basis. If you’re more of a “set it and forget it” person, you can take a long-haul approach.
For instance, Motley Fool’s investing philosophy focuses on things like growth stocks, buying a company instead of a stock, and holding stocks for at least five years before selling.
By figuring out what kind of an investor you are, you can tailor your strategies, asset allocations, and risk tolerance to match. You can also use that information to establish investing goals and set boundaries to moderate your activities. This helps avoid the trap of turning investing into gambling.
Investing is exciting. As an entrepreneur, it’s a wonderful reward for your hard work. It’s also an opportunity to let your hard-earned money make some passive income for you.
Take the time to study investing and come up with a distinct, personalized strategy. If you can do that, you can turn investing into yet another profitable business venture to add to your growing resume.