Entrepreneurs have different risk profiles than everyone else. Most entrepreneurs fail to take their career into account when considering their investment strategy.
- Look beyond your bank and brokerage accounts. You need a holistic, complete picture of your financial situation in order to develop a smart investing strategy. Your bank and brokerage accounts don’t tell the whole story: being an entrepreneur means you have an inherently risky career. It’s like owning a concentrated position in just one stock.
- Aim for balance overall. If both your portfolio and your career tilt toward risk, you’re unbalanced overall. Factor this into your asset allocation. Consider offsetting greater career risk -especially in volatile, early-growth-stage years – by placing more assets in less volatile holdings, like fixed income.
- Don’t invest exclusively in your own industry. Investing in the same field as your career further concentrates risk. Diversification is key to a healthy portfolio.
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