One of the many ways in which entrepreneurs and business owners diversify their income is via investments. Investment planning, which is supported by professional financial advisors, is an excellent way to create multiple streams of income and can allow you to focus on building your business, whilst your investments contribute to building your wealth.
If you have never considered having an investment portfolio or are unsure what sorts of investments you can make, then the first port of call should be financial advisors, as their services will almost certainly include investment planning. In simple terms, investment planning is a means of identifying your financial goals and aspirations and marrying them to investment opportunities based on your financial resources.
Beyond that explanation, your financial advisors should go into detail about what the objectives of investment planning are, ensure you know why it is required, and also explain some of the many benefits that investment planning can produce. To get you one step ahead of that discussion, below we have briefly outlined some the of points your financial advisors may cover.
Objectives Of Investment Planning
To Minimize Risk: One of the key objectives your financial advisors have when they are investment planning with you is to ensure that your risk of losses is minimised to the lowest level possible.
To Generate Income: A core objective of any investment is that it should produce income and by shrewd investment planning, opportunities for generating income can be identified based on your financial goals and resources.
To Grow Your Capital Investment: Whilst some investments are made to generate ongoing income, others can be identified as a means of growing your capital investment. These tend to be low-risk investments designed to be kept over the long term.
To Reduce Your Tax Liability: Everyone want sot to pay fewer taxes (we hope) and during the discussions you have with your financial advisors, they will be able to explain how certain investment strategies can reduce your tax liability.
To Provide A Fuller Understanding Of Investment To The Investor: As well as all the practicalities of investment planning such as choosing what asset classes you are going to invest in, your discussion with your financial advisors is also an opportunity for you to learn about, and increase your understanding of, investments and wider financial matters.
Benefits Of Investment Planning
Proper Management Of The Income Produced: As your investments generate income, one of the benefits of investment planning, especially if you are being supported by financial advisors, is that your income will be managed effectively for you, such as how it is reinvested or how your tax liability is minimised.
Financial Security For You And Your Family: Proper investment planning means that, as your investments grow, each dollar that is added to their value increases the level of financial security that you are creating for you and your family.
You Have The Optimum Balance Of Liquidity And Returns: What if you suddenly required a cash injection to support your business? You would need that cash fast, and thanks to shrewd investment planning you should be able to turn some of your investments into liquid assets quickly.
You Have Additional Income Streams Which Improve Your Wealth And Standard Of Living: Whilst we assume your business is growing right now, every business can experience lulls. At those times, the income which is being generated from your investments can ensure you have the resource to support your business, and even if your business does need it, that income can support and improve your standard of living.
Your Risk Is Spread Across Multiple Investments: investment planning is essential to ensure that you do not limit the diversity of your investment as this diversity increases income and reduces risk. Your financial advisors will ensure that you have the optimal diversity of investments across different asset classes and specific investment opportunities.