Wealth accumulation question

[Phil]

Once you have your own profitable business which is running well and you want start investing in some assets where do you start?
Do you begin with Rental Properties, Stocks or, businesses?
I understand that wealth accumulation is all about investment in a strong portfolio of diverse assets all creating cash flow. But what would be a good strategy for a business owner looking at developing their portfolio?
I'd love to hear your thoughts on this and stories of what have worked for you personally.
Thanks, all the best
Phil:cheers:

 

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[randallg99]

When my business was doing well I channeled the funds into CDs, mutual Funds and cash flow positive real estate.

Admittedly these were very good moves on my part.

My goal was to have several different streams of income to hedge against each other and this has been my safety net during this recent economic turmoil.

In 20/20 hindsight I can assure you that I "shoulda, coulda, woulda" leveraged myself further with cash flow real estate but diversity is very important to preserving the capital so that you can grow.

Good luck.

 

[Kung Fu Steve]

In my eyes, I decided to just stick with what I know. While I have gained a lot of knowledge in real estate, trading, and some commodities I am still not as comfortable as I am with business.

I am investing my money I have made into new businesses. It just seems like such a sure thing to me. I know I have a marketable product, I know people will buy some me, I have the complete confidence it will succeed. While that may not be true of real estate for me. Ask another forum member such as Runum or SteveO who rock the real estate world they probably wouldn't give you my answer.

It comes down to confidence. While business is not more or less riskier than real estate, or any other type of investment, I have complete and utter confidence that I will succeed in other businesses. And seeing what businesses will be successful. I will eventually get into angel investing which excites me more than anything else! Give people that chance that I was given!

 

[Bobo]

It's a good question. Jill and I have been brainstorming on this and really I think you have to ask yourself some other questions before you find your own answer.

For example, we have a list of critieria:
1. It has to be passive, fire and forget or
2. It has to involve outsourcing the daily work to others

That criteria is based on a recognition that I am just stretched too thin right now with a new job that requires 12 hours on a good day. I can't commit to anything else that requires daily time from me right now. I can commit to sporadic chunks of time like right now while I am waiting on some legal and financial reviews on a proposal and am twiddlin thumbs. I can commit to a few contiguous full days every quarter or so as well...

3. It has to be reasonably safe. Jill's got the boots and spurs around here, my fear of loss outweighs my greed factor and at the end of the day she's smarter but I am a larger, immovable object.

4. Depending on where the capital comes from there are size requirements. We self direct our IRA funds and that limits where we can invest them and for the hassle it means big chunks. If it's from current income I throw the max into my ESPP and when it hits every 6 months I snatch it out immediately, take the 15% and then we have a nice chunk that can be invested but that's 10K chunks, not big investments. Other stuff requires a little savings time as last year life treated our finances like a hound treats a fire hydrant...

What specific type? I like real estate conceptually for long term wealth building. I don't trust any of the markets right now but if I understood them well enough I'd bet the farm on whatever will pay off huge if the economy of every country with unsustainable unfunded entitlements plans collapses but I don't know who wins when the European welfare states implode.

So what's your risk tolerance? what kind of time to you have to commit to minding your investment?

 

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[GlobalWealth]

I like to follow trends. But I am a very active investor and this wouldn't work for someone like Bobo. Working 12 hrs/day and doing what I do wouldn't be very conducive to the finer things in live, like eating and sleeping.

When I ran my company, I did RE. I started with my own office building because I trusted the tenant would pay on time. Then I bought some land and other commercial buildings. This worked at the time because it was passive. It didn't really require additional time other than accounting.

I also did some commodities trading about 12 years ago. Did quite well with it, but the other business was in 'autopilot mode' and I had the time to invest in learning about it. Once the biz got busy again, I had to shut that down and close the account.

While running the company, I bought 4 other smaller competitors. This was an investment, but not passive. But the synergies of the business allowed them to be quite profitable. and it allowed me to stay on focus with the current biz.

Around 2007, I started selling the RE. I also went long treasury bonds. I sold my last piece of RE in September 2008 (whew...). Shortly thereafter the markets tanked and my treasuries skyrocketed. All during this period I had maintained a stock portfolio, but had move most of it to treasuries plus cash from the RE sales at this point.

I got back into stocks a bit early (Nov/Dec) right after the initial crash, then went in bigger in March/April.

But during this period, I was reading financial news, newsletters, blogs and anything else I could put my hands on to learn and keep updated. This is not a passive strategy by any means. This is a full time job essentially.

The 2 most valuable commodities on earth (as it relates to this thread) are time and money. If you have the time, then dive in head first and learn everything you can. The hardest worker (as long as you are above a Forrest Gump IQ) will win here. But without the time to commit, this is a scary market to be invested in right now. This is not a buy/hold kinda market.

This is a trader's heaven. But trader's are very, very busy. I subscribe to dozens of newsletters. Some of them free, many of them high priced research report letters. And I read them all. Everyday. I read them on my phone when I am waiting on my pizza at lunch. Yes, I am a junkie. I admit it.

But if you are like Bobo working 12 hrs a day at your job/biz, stay out of the market right now. Unless you are buying gold and silver etf's.

The alternative is to hire a investment advisor who can actively manage your money.

 

[theBiz]

yeah just get an investment adviser, my uncle used to use this guy Bernard something... i forget but made some good money. Sorry i had to do it.