It's Never Too Late to Invest Wisely. Just Don't Raid Your Retirement Funds.
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Successful entrepreneurs didn’t get to where they are by taking small, timid steps towards their goals. They dove in and did the work -- whether tedious or action-packed --to strategically build their businesses. That’s why their attitude toward investing should reflect their tenacity in the boardroom.
Investing as an entrepreneur means more than handing over your money to an advisor and checking in once a year. Give your investment portfolio a boost with these best recommendations.
1. Investing in your passion pays off.
Traditional advice to invest in stocks, bonds and real estate are the norm and are generally reliable options for successful entrepreneurs. But there are other ways to earn an impressive return on your money that are as unexpected as they are alluring. As an example, some wealthy investors dip into the rare coin market both to satisfy their passion for collecting and displaying their finds and as a longer-term investment strategy.
Coin collecting is far from a time-wasting hobby for the wealthy. According to the Luxury Investments Index, rare coins soared 25 percent in value in a single year and over 248 percent in the past 10 years.
How about lean hogs? Commodities might not be your passion but finding unique and profitable investments might be. And, in fact, lean hog futures were the best performing commodity after coffee in Standard & Poor's Goldman Sachs Commodity Index Spot Index in 2014. If lean hogs just don't fit into your investment strategy, you can also look into commodities like soybeans, live cattle and even random length lumber.
2. Crowdfunding is a viable investment strategy.
For successful entrepreneurs, crowdfunding can be so much more than investing in a new gadget on Kickstarter in return for free merchandise and perks. Instead, invest in startups and secondary market equities with MicroVentures. The platform works as a gateway for pre-vetted early stage projects that typically were only accessible through investment firms and banks.
Crowdfunding has also changed the real estate game. Real estate has always been a popular investment strategy for entrepreneurs looking to get in on lucrative commercial properties, but new companies like RealtyMogul.com make it a more low cost and low risk way to invest than ever before. Through the platform, multiple investors can come together for a relatively small investment and watch their portfolios grow. Currently, Realty Mogul’s investment requirement starts at $5,000 for accredited investors, opening the door to opportunities you would traditionally need millions just to get introduced.
3. Invest outside your industry.
Many successful entrepreneurs turn the tables, taking the dive into angel investing themselves in order to earn a return while helping other startups get up and running. Instead of investing within your industry, take a step back and look at other areas commanding a high return.
As an example, did you know you can invest in Broadway shows? They can be a hit or miss, but choose the right one, and you could see returns for decades. The Phantom of the Opera is history’s longest-running Broadway show and its most successful production, grossing $5.6 billion globally. Investing in a Broadway show requires as little as $25,000 and can earn you the title of producer and even Tony Award winner.
4. Your business isn’t a retirement plan.
Going all-in on your business and raiding your retirement funds may get your company up and running, but it won’t leave you with much when it comes time to slow down. That’s why it’s so important to set up a traditional financial cushion to ensure your financial security instead of betting on selling your company in a few years and rolling it into your next successful venture.
You can work out a complex investment strategy with your financial advisor across stocks, bonds and mutual funds, or you can simplify the process and set up a no-fuss plan, like an SEP IRA or get tax-deferred contributions with a solo 401k that you can set-up on your own. Create a financial cushion for yourself, as well as for future investments you want to make before you think about investing outside of your business.
5. Anyone can learn to invest.
Choosing a financial advisor carefully is only the first step in investing, and it shouldn’t replace learning how to do it yourself. Take, for example, Paul Glandorf. Paul is a senior citizen in Ohio who joined an investment competition in 2013 that involved buying five stocks on New Year’s Day and holding them until the year's end. CNN Money reported that his return was a staggering 71 percent, despite his Lululemon pick dropping 20 percent in the process. Glandorf is self-taught and runs his own stock club to trade tips and help other people learn the tricks of the trade.
You don’t need to be the next Glandorf to master your investment strategy to win big. But any successful entrepreneur should know where their money is being invested and why. It’s also essential to evaluate and potentially re-balance your investment strategies every year to ensure you’re not leaving money on the table -- or worse -- flying out the window. If you aren’t going to keep an eye on your investments yourself, you might as well hand over your cash and tell your advisor that, hopefully, you’ll be back for it when you retire.
What else do you think every entrepreneur should know about investing and what to try next? Share your best insights by leaving a comments below.