India has had a huge growth of entrepreneurs setting up their own business in the last couple of years. Although it’s nice to go after your dreams and be your own boss, you should remember that with great power comes great responsibility.
Invest outside your company
Most entrepreneurs consider investing in their own company as the best decision. Although it might possibly hold true, young business owners must remember that their business goals are different from their personal goals. Often times, in the case of a married entrepreneur, the spouse might not be in sync with your decision to bet all your money on one horse. If you do decide to pump all your money back into your organization, consulting your family and keeping them informed of your decisions will help them understand the situation better. Of course there is always the possibility of unexpected accidents or an untimely death which can devastate your family. Don’t leave your loved ones stranded without a stable financial support. That’s why as advisors, we tell our clients, especially entrepreneurs, that investing outside their company is essential for a balanced life.
Low risk or high return
Nowadays, young entrepreneurs invest their money expecting high returns with minimum risk. Unfortunately, that’s just not feasible in the real world so you have to choose between low risks or high returns. Keeping your money safe in a bank will definitely not fetch you returns to beat the inflation. So, unless you’re willing to compromise on your safety, you will not see a substantial growth in your returns. With options like liquid funds, balance funds, debt funds and equity funds, being confused about where to invest your money is common. But don’t worry about that yet, start saving first and focus on building a corpus. The most important thing about building wealth is discipline. Make it a habit to put away some money every month towards investing for your personal goals.
Talk to the expert
Actively managing your money and fronting an organization at the same time can be tricky. Having an open conversation with wealth experts can open you up to new possibilities and greater opportunities. However, make sure your financial coach really understands you and your needs before taking any advice.
Best financial practices for entrepreneurs –
- Whether its to save or spend, map your financial plan to your goals.
- Avoid impulsive shopping
- Measure your risk-returns regularly
- Avoid taking too many loans
- Invest in liquid fund accounts – money can be invested and withdrawn easily for near term goals