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Leveraging Liquidity to Your Advantage: Top Investing Tips for Entrepreneurs

 

Some individuals invest for fun while others are focused upon a career on the open markets. However, another type of investor embraces a medium-term point of view with the sole intention of obtaining liquidity that can be placed towards an entrepreneurial venture. Few entrepreneurs have the available liquidity to start a business from scratch, and this form of investment is a growing trend.

It also stands to reason that the recommendations associated with this project are slightly different when compared to standard methods. Assuming that you are considering a venture into the world of online trading; what do you need to know? While it is important to fully appreciate how to start a business from the ground up, this knowledge will represent a moot point if you do not have the proper financial backing.

 

A Delicate Balance Between Conservative and Daring

 

It is often tempting to become involved in short-term ventures due to their potential to provide you with an immediate profit. Examples of this include CFDs, ETFs, and Forex positions. However, always remember that such liquid trades involve an appreciable amount of risk. While there is nothing wrong with including a handful of such assets within a portfolio, a budding entrepreneur should try to keep them to a minimum.

 

It is normally best to develop a portfolio primarily comprised of medium-term holdings. While these might not be as liquid, they tend to provide a greater degree of stability in the event that you encounter knee-jerk reactions on the open market. Here is a brief breakdown of a portfolio designed to raise money for a business:

 

  • Blue-chip stocks: 40%.
  • Commodities (gold, silver and oil): 30%.
  • Treasuries and/or bonds: 20%.
  • Liquid assets: 10%.

 

In the event that your liquid holdings suffer a loss, this slight dip can often be offset by gains in more stable asset classes.

 

Always Know Your Targets and Limitations

 

While Gordon Gekko stated “greed is good” in his iconic Wall Street speech, we are living in the real world. Greed can cloud the emotions and lead to dangerous judgements based more off of emotion than fact. Always temper your dreams with a sense of reality. Set clear financial milestones in relation to your business.

Try not to focus upon weekly gains, but instead set your eyes towards quarterly and bi-annual goals. Not only will you be able to see the medium-term impacts of your decisions, but this approach is associated with much less stress (as opposed to keeping one eye on the markets throughout the day).

 

It is also wise to leverage the benefits associated with powerful e-commerce platforms such as Shopify, as these utilities and tools are perfectly suited for startup ventures. Furthermore, competitive pricing packages ensure that you will not be digging yourself into a financial hole during the interim. With patience, insight and hard work, your dream of owning a lucrative and rewarding business could be much closer than you have ever thought possible.