Small Business Financial Article
|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
Business Owner Obstacles to Achieving True Financial Independence
It’s a simple fact. Business owners face financial challenges endemic to their career which, if not addressed early, can become obstacles to building wealth. It’s a problem even a high six-figure income can’t overcome. However, most obstacles can be anticipated and, with sound planning and targeted strategies, they can be totally eliminated of reduced to mere speed bumps.
Drawing upon the experiences of business owners who have prevailed, we have assembled a list of the biggest obstacles you may face in achieving true financial independence.
Not Having a Serious Retirement Income Plan
With their businesses front and center in their lives for at least the first couple of decades, many business owners give little thought to retirement. While they may have in mind a target date for retirement, many have no clear vision of what they would consider as their retirement lifestyle. And, without clarity in what it is they are after, it’s difficult to put any kind of math to a plan.
Not Having a Sound Investment Strategy
The challenge in investing is not that it takes special skills or knowledge. It’s that it is often driven by emotions which can be devastating for investors who lack a clear investment strategy. Also, some may also not have the patience and discipline to follow it. It’s emotions that drive investors to buy high in times of market exuberance and sell low during market panics. It’s also why many investors still haven’t recovered from the losses of the 2008 market crash. Having a thoughtful investment strategy enables business owners to stay focused on their own long-term objectives, rather than meaningless market benchmarks or indexes.
Investing too Conservatively
There is no denying that investing in ultra-safe or guaranteed vehicles offers the peace-of-mind that you won’t lose your money due to market fluctuations. However, playing it too safe ignores the more ominous risks of inflation and longevity. Those two factors combined can produce a more pronounced asset loss over time. History has shown us the potential for stock market losses is more of a “perceived” risk where investors can only lose money if they actually sell their stocks into market declines. But inflation and longevity are “real” risks which can’t be avoided, but they can be mitigated with the right investment strategy.
Trying to Go it Alone
With their whole financial future at stake, it’s surprising there are still some business owners who would prefer to go it alone. Perhaps they think they can do better on their own, or that investment advice is not worth the cost. Yet, studies have shown that, when investing on their own, investors tend to make decisions that impede their ability to achieve their long-term objectives. A recent Study by Vanguard, a leading “do-it-yourself” mutual fund provider, indicates that by working with an experienced, independent financial advisor, investors can increase their returns by an average of 3 percent per year. And it’s not necessarily because they can come up with more brilliant investment strategies. Rather it’s because they can keep investors from making costly mistakes.
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