The Most Essential Things to Invest in

pepi-stojanovski-509192-unsplash.jpg

Over the last several weeks, I’ve spoken about how to become a successful entrepreneur, offered advice on success, dove into risks, and even shared my five rules for success. But there’s one key thing I haven’t mentioned. The way you invest is important, too.

As an entrepreneur, you’re already used to taking on risk. You’ve rejected steady paychecks to work for yourself. You are your own boss. You’ve even prepared yourself to go down with the ship. However, not everything has to be high risk.

You also need to think about protecting your finances and future.

For example, you may want to create a portfolio of stocks, bonds, and mutual funds in “no touch” portfolios. You want to reduce the temptation of touching all of your funds sometimes just to solve a short-term need.

You also want to make sure you build cash cushions.

Most entrepreneurs – good ones – can’t pass up a good deal when they see it. You can ‘t invest in those if you don’t have the cash, though. To solve that issue, put a cash cushion aside, free to new potential opportunities.

Make sure you have a solid business model, too.

As Inc. once noted:

“Every business aims to create a profitable business model. The source of value in the business is the long-term profit potential it possesses. But it's very easy for growing businesses to move away from this mindset. Growing businesses typically have a viable customer offering or two along with a number of attractive investment opportunities. Most of these opportunities require a redirection of would-be profits and resources that can easily drive the business into negative territory.”

It’s also essential that you at least attempt to diversify outside of your business, too.

Some entrepreneurs take their last dime and plunk it right into their business. Unfortunately, a return on that capital is not always a sure thing. It’s up to you in the end, but doing so isn’t the greatest of ideas. In fact, treating your business as your “one and only” investment is the ultimate form of anti-diversification.

In short, invest well. Invest smart. And always be sure to invest in yourself.