Why You Should Treat Your Investments Like a Business

August 9, 2023
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Nobody ever said being a successful investor was easy. It takes smart planning, strategic diversification and good timing. You need to know which moves to make and when. Some investment strategies are ideal for short-term gains and tax advantages. Others are designed to provide long-term stability and growth along your ultimate journey toward financial independence.

An Entrepreneurial Approach

Some of the most successful investors in the world come from entrepreneurial backgrounds. They’ve owned businesses and they understand what it takes to make a company profitable. They apply man of these same techniques to their investment portfolios—often to great effect. In short, they treat their investments like a business. This is their key to investing prosperity.

You may be a business owner yourself, or you might not have any background as an entrepreneur. However, you have a long-term goal of financial freedom. You want to live the lifestyle of your dreams, provide a healthy nest egg for your family’s future, and save enough to enjoy a comfortable retirement.

Building Your Investment Plan

Whether you have an entrepreneurial background or not, there are steps you can take to treat your investment portfolio more like a business venture. It starts with having an investment plan, just like you might have a business plan for a burgeoning company. Business owners start with a business plan that maps out their ideas and goals. It’s a road map to get a business off the ground and start making more money as certain milestones are reached. Then, that plan is reviewed and adjusted periodically (quarterly, annually, etc.) based on market conditions, business performance and changing goals.

This same planning approach is critical for a successful investor. Having a plan in place will help you get started on the road to investment success. Then, you must keep adjusting the plan as time goes on in order to keep moving in the right direction. Market conditions change. Your life and your goals evolve. You have to react to certain variables affecting your investments in the present, while planning for other things that may or may not happen in the future.

Financial Partners

Second, it helps to have a trusted partner on your side. If you are running a successful business, you likely have good leadership in place beyond yourself. You have executives and managers who have expertise in different fields. They help you achieve your objectives and bring your business plan to fruition. Most investors choose to have partnerships with experienced advisors who can help with planning, provide guidance, execute timely moves and manage important issues such as tax planning. Consider your investment advisor(s) a critical part of your business as you manage your investment portfolio. 

Financial Management

Lastly, you have to consider the financial ebbs and flows that come with any investment plan. A business will have profits, losses and expenditures. So will an investment portfolio. Carefully tracking and managing your investments will help you better understand how everything is working. Over time, you can use this knowledge to your advantage as you optimize different aspects of your investment plan. Again, having an expert guide on your side (an experienced CPA, for example) can help you manage your books and ensure success in the long run.

For all your financial planning and investment management needs, count on Illumination Wealth. Contact us today to speak with one of our experience advisors and see how we can help you build a more successful investment portfolio.