Diversification of one’s income

VOLATILE TIMES: REINVEST YOUR HARD-EARNED MONEY.

Essentially, the idea is to take some of your profits and invest into anything other than your primary business.

The satisfaction that comes from achieving an entrepreneurial venture is priceless, not to mention the financial rewards that come with it. But after success, the greater challenge is to sustain the financial wealth you have accumulated, because many have lost it quicker than they made it. This is not only due to reckless spending but also because they didn’t have a long-term financial plan, other than their business.

Statistically, having a business is the most probable way to build wealth but, as we all know, businesses can fail even after initial success.

You, as an entrepreneur, must have a financial plan that doesn’t rely solely on the income from your business. In other words, you need to diversify your portfolio, as it is known in the investment world, which simply means you need to find different revenue streams other than your business.

Diversifying your income can be accomplished in many ways, using different investment vehicles that suit your appetite.

Essentially, the idea is to take some of your profits and invest into anything other than your primary business. There is an array of investment opportunities you can sink your teeth into, such as investing into a new and different business or buying property to lease out or resell at a higher price.

How about opening a trading account on the financial markets to invest in stocks, bonds or forex. If you do not feel confident in your trading abilities, you could always invest in a mutual, hedge or private equity fund.

The point is, you cannot rely solely on income from your business in today’s volatile market, where infinite unforeseen financially detrimental events can occur.

Therefore, do yourself a favour and resist the temptation of splurging your profits on nice things. I understand you may have had a horrid time building your business and you most certainly deserve to buy yourself a thing or two, but wouldn’t you rather have financial freedom for the rest of your life, than a fancy car today that leaves you bankrupt?

The only way to insure long-term financial stability is by reinvesting your money in the beginning.

Some might argue that their business alone can sustain them for their entire lives. Yes, that is possible, but only if the business is built and managed extremely well.

However, a business can also diversify its revenue. Whichever investment you choose, you or your business should not have only one source of income.