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How do entrepreneurs invest?

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Dufresne

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May 5, 2018
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As a BIG fan of MJ and his books, I'm a firm believer that true wealth is created by making smart investments in yourself, and your business as opposed to the compound interest fallacy. But I'm curious, how do entrepreneurs invest their excess cash? I'm not sure there's a definitive answer, but wonder what techniques are being used by business owners.

For me, I look at retirement plans (i.e. 401(k)s, SEPs, etc.) as a way to mitigate tax liability and have my investments grow tax-deferred using a variety of highly liquid, low-cost index funds. However, I also balance the need to have liquidity in my business and personal life to allow me the flexibility to reinvest back into my business or another alternative investment, i.e. real estate. Thus I've been looking at money market accounts through online, FDIC insured banks with rates hovering around 2.3% to park my cash. But when I review my financials YoY and see that my business has increased 40%, it's hard not to want to reinvest everything!

Interested to hear your thoughts on this and any strategies used that have proven to work well. Thanks.
 

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100k

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Great strategies, if you want to be in the middle classes.

If you want to be rich - then you'll need to invest in things that will give you a little higher return than 1-8%.

The rich park their money in the stock market and real estate (some make their money in the real estate) - but for the most part, the wealthy become wealthy from business ownership i.e starting a business or investing in an early start up and realize exponentiation growth or a big exit down the road.

Read MJ's book again and again. All the info is there.

/ Edit ... sorry re-read your post.... looks like you're already running a business and have some spare cash to throw at things. I'll let others chime in that are already where you are. Me; I'm still in the "everything on black" i.e all my $$$ goes into my business(es) faze.
 

shredmer

PARKED
Oct 7, 2013
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I am also curious about this. I sold my business last year and have been spending a lot of time trying to figure out where to invest for passive returns, this way I can stay active in building another business. It would be ideal to build up passive cash flow to cover living expenses but I have been having trouble finding a good way to do that.

So far here's the portfolio I have been building:
  • Stock portfolio - Long term index funds, REITs, Dividend growth stocks, yolo stock bets
  • Roth IRA - Just cash atm, not sure where to invest yet. Might just stick in index funds
  • PPM's - Real estate and oil & gas so far
  • Emergency fund - Cash in a high yield savings acct
  • Crypto
  • Small business loan - Loaning back to the business I sold
  • Business income (still own 20% of the business I sold)

It may seem like a lot of different investments but I really don't feel that diversified. I would like to have maybe 10-15 different passive investments that are not too correlated. I am still mostly in cash trying to find good investment opportunities. If anyone has any good places they have enjoyed parking capital, it would be great to know!
 

Dan_Cardone

Losers make excuses. Winners find solutions.
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All my investment money goes back into one of my current businesses, starting a new business, or into other peoples business.
 

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