Consider Company Equity:
Entrepreneurs have a few additional items to consider when investing. Unlike most people who are employed by someone else, the self employed are building equity in their company. This leads to the possibility that their investment portfolios could be too heavy on stocks. The amount of equity an entrepreneur has in their company should be considered when choosing investments.
For Example: If a person has 100k of equity in their company and another 100k to invest, then the portfolio should be looked as 200k invested and 100k already in equity. Therefore, based on the individuals risk tolerance, the cash will most likely have a larger position in fixed income than expected.
If this money is going to be a portfolio that is 80% and 20% bonds that means 160k would be in stock and 40k into fixed income. However, the person already has 100k of equity in their company so of the 100k in cash only 60k would go into stocks and the other 40k into bonds.
This commentary on this website reflects the personal opinions, viewpoints and analyses of the J Benjamin employees providing such comments, and should not be regarded as a description of advisory services provided by J Benjamin or performance returns of any J Benjamin Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. J Benjamin manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.