There is a significant misconception that you don’t need to even consider wealth planning until you are feeling established in your career. Savvy entrepreneurs know that this is the wrong approach to financial planning.
After all, no matter what business you are in, financial planning will assist you in ascertaining your short and long-term financial goals and in formulating a realistic strategy to reach those goals.
It helps you to manage your income and to increase cash flow which may, in turn, lead to increased capital. It aids you in providing for your family’s financial security while ensuring you pick the appropriate kinds of investments to match your desires and goals.
Plus, there is a lot to be said for having greater financial understanding, savings in the bank, a relationship with a financial advisor, and potentially a second citizenship for you and your family as part of the strategy.
To assist you on this journey, read on for four tips on wealth planning that savvy entrepreneurs follow.
1. Start where you are.
You don’t need to have a large amount of money set aside to start investing; instead, you need to start small, where you are and allow your money to grow through the magic of compound interest. Over time, you can continue to increase the amount you are investing in equal proportion to the rise in your income.
Therefore, it is essential that you take the time to produce a formal strategy – such as a written plan – to guide you through the process of accomplishing your financial goals. This plan should cover defining your goals, creating a budget, cutting expenses, creating an emergency fund, getting out of debt, saving for retirement, saving for other purposes, having adequate insurance, and setting up a will.
2. Always be diversifying.
Once you have started investing, it is important to realize early on that you want always to be diversifying. Investing in this manner endeavors to maximize your potential returns by having your money in separate domains that would behave differently to an identical event. While this isn’t a surefire way of avoiding loss, it is an essential component for achieving long-term financial goals while reducing risk.
Having a financial plan that incorporates a diverse range of investments and businesses is a vital tool in your stockpile that can move your business and life toward success.
Many invetsors today try to minimise their cash deposits especially in banks that are offering negative interest to hold the funds.
3. Conduct annual financial reviews.
Every year you want to grant yourself the time to sit down and have a thorough look at your financial situation to ascertain what is working and what isn’t. You need to understand your liabilities and your assets in order to know your net worth and reach your financial goals.
Additionally, spend some time studying your cash flow trends and ask yourself whether you are earning more each year and keeping up with inflation and if you have more excess cash flow than previous years. Ideally, your net worth should be increasing every year and your savings growing alongside it.
4. Obtain second citizenship.
Just as you want to be diversifying your investments and your businesses, you also want to be looking for additional ways to expand your options so that you have more flexibility in the future. Many savvy entrepreneurs are looking to obtain Antigua and Barbuda citizenship by investment for this very reason.
This is one of the best strategies for you to safeguard your private wealth as this country doesn’t have personal worldwide income tax, nor capital gains nor any inheritance tax, hence as a future permanent residence option as part of a future tax saving exercise, it can make a lot of sense.
Additionally, it assists you to open and maintain bank accounts and businesses in other countries, and can be helpful for entrepreneurs who are looking to expand their operations. Furthermore, this setup will provide you with protection from any current or future political instability in your home country and provides a hedge against future mobility issues
Is wealth planning something that is on your mind? Have you taken any steps to increase control over your financial lifestyle?
Let us know any tips and tricks you may have or any challenges you are currently going through regarding your financial planning in the comments below!