In­vest­ing for the busi­ness owner

The Advance of Bucks County - - BUCKS COUNTY BUSINESS -

To be a suc­cess­ful busi­ness owner re­quires con­fi­dence, en­ergy and a will­ing­ness to take risk. Add to th­ese qual­i­ties an emo­tional com­mit­ment and in­nate vi­sion of know­ing what is best for your busi­ness. ft is also im­por­tant to rec­og­nize that there are cer­tain times or un­planned events that re­quire the owner to aban­don a for­mal busi­ness plan and in­stead rely on his ex­pe­ri­ence, vi­sion, know-how or in­stincts to lead him and his com­pany to suc­cess. mut an­other way, to­gether, owner and busi­ness take a “leap of faith”.

jost busi­ness own­ers pos­sess a gam­bling men­tal­ity that al­lows them to take risks that would keep most peo­ple awake at night. fn do­ing so, they ful­fill the dual roles of fear­less risk-taker and wise cor­po­rate leader. lne would as­sume that the qual­i­ties of be­ing a suc­cess­ful busi­ness owner would also make you a suc­cess­ful in­vestor. kot so fast. As an in­vestor, over­con­fi­dence can lead to your even­tual un­do­ing as can al­low­ing your emo­tions to un­duly in­flu­ence your in­vest­ing de­ci­sions. Check your com­pet­i­tive­ness at the door and re­mem­ber that you can­not beat the mar­ket. As a busi­ness owner you can out-work the com­pe­ti­tion, not so as an in­vestor. fn­vest­ing takes pa­tience, hours of re­search and study, ex­e­cu­tion with­out emo­tion and the un­der­stand­ing that some­times the best ac­tion to take is no ac­tion.

Tips for the busi­ness owner – in­vestorW

N. Do not be over­con­fi­dent. that made you a good busi­ness owner may not serve you well as an in­vestor.

O. Choose an in­vest­ment ad­vi­sor that un­der­stands you. iook for an ad­vi­sor who un­der­stands the de­mands of and risks as­so­ci­ated with be­ing a pri­vate busi­ness owner. ptay in­volved in the in­vest­ing process. oe­mem­ber that one of the best things that good busi­ness own­ers do is to con­stantly ask ques­tions, prob­ing for a new or dif­fer­ent ap­proach. thy change now?

P. iook long term. dood in­vest­ing oc­curs over years and busi­ness cy­cles, not from one quar­ter to the next. iearn to tem­per your re­ac­tions to chang­ing mar­ket forces.

4. Ac­cept risk with your busi­ness. De­velop an as­set al­lo­ca­tion plan that bal­ances risk and re­ward in light of the fact that you are tak­ing large risks ev­ery­day as a busi­ness owner.

5. heep your in­vest­ments sim­ple. Your busi­ness may be com­plex, your in­vest­ments need not be.

6. ptay away from in­vest­ing fads and “picks-of-the-month.” You did not build your busi­ness by tak­ing short­cuts, so don’t take any as an in­vestor. Avoid the urge to pick in­di­vid­ual stocks. te sug­gest that our clients fo­cus more on get­ting size Elarge, mid or small capF, style, coun­try and sec­tor right.

T. Don’t gam­ble. De­riv­a­tives are spec­u­la­tive in­stru­ments best suited for in­dus­try pros.

U. jin­i­mize fees. An ef­fi­cient busi- ness looks to rea­son­ably re­duce its cost of op­er­a­tions at all times. po do smart in­vestors.

9. Con­sider the im­pact of taxes. heep your ac­coun­tant well in­formed through­out the year on re­al­ized cap­i­tal gains and losses from your in­vest­ment ac­counts.

NM. Avoid mar­gin. rse lever­age to grow your busi­ness, not buy stocks and bonds.

NN. ff you sell your busi­ness, con­grat­u­la­tions. ff you end up with a large po­si­tion in the ac­quir­ers stock, eval­u­ate hedg­ing and mon­e­ti­za­tion strate­gies to di­ver­sify the con­cen­trated stock risk. oichard j. telch, Jr.

phare­holder and Chief fn­vest­ment lf­fi­cer

EmF ON5 6MP O9T6 rick­[email protected]­emy

wealthad­vis­ers.com

By Richard Welch

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