As a young entrepreneur, you’re already caught up in the daily grind of trying to grow your startup and turning it into a profitable venture. But building a business can’t be your only source of income. Taking that route is akin to the proverbial saying about putting all your eggs in one basket. One wrong business move or a crippling economic landscape, and you could easily be back to square one with an empty bank account and no backup plan. Scary, right? I know! So, while you work for money, it’s also critical to ensure your money works for you, and there’s no better way to achieve this than with smart investment strategies. But then again, investments can be risky, with the potential for losses as much as gains.
With this in mind, I get it if you’re a bit skeptical about the financial instruments to invest in. To help you out, I’ve put together some smart investment moves that you can consider as a beginner with a modest budget. If you’re thinking about building sustainable wealth beyond the sales numbers from your business, here are some strategies that are worth your attention:
1. Consider Digital Assets – The Asset Class for GenZ Investors
If stocks come across as old school for the younger generation—the kind of stuff grandparents talk about while reading newspapers—I’ve got a cooler option: cryptocurrency.
Yup, the much-talked-about alternative to traditional money can be a means of earning passive income. I know cryptocurrency investments are muddy waters for many people.
Concerns about market volatility and regulations often prevent most individuals from investing in coins like Ethereum and Bitcoin. But with the right guidance, the crypto market offers immense potential for profits.
Your journey into the crypto terrain will involve learning the basics of trading, understanding the different investment strategies, and creating a trading account with a platform like Exness to refine your strategy with small investments and building from there.
Of course, as an entrepreneur, you probably don’t have the time for active day trading. Instead, you can focus on more passive strategies like HODLing and dollar-cost averaging.
2. Take the Conventional Route With Stocks
I know you think stocks are a financial instrument meant for the older generation or Wall Street folks, but it might be time to change that belief. There’s a reason it’s one of the most trustworthy assets for millions of people.
It has a historical track record of generating high returns for investors. Plus, it can serve as a hedge against inflation. But unlike crypto, which can be used to reap short gains, the stock market is for individuals who think long-term.
Whether you’re investing in blue-chip or growth stocks, you need to identify options that have the potential for high long-term returns. Of course, smart investment strategies will require you to research the market.
For accurate market insights, you should trade with a platform like Exness that offers access to fundamental and technical analysis tools. These features provide real-time data to inform your decision-making for smart investment strategies.
3. Tap into the Property Investment Market for Regular Passive Income
Real estate is one of the oldest asset classes in the world. It’s quite popular among investors because it offers short- and long-term gain opportunities with different strategies to consider.
Depending on your budget and investment goals, you can invest in real estate using the following methods:
- Rental properties (commercial or residential)
- House hacking
- Fix and flip
- Short-term vacation rentals
- Real estate crowdfunding
Alternatively, investors can also consider real estate investment trusts (REITs). These are companies that own and manage real estate properties. You can invest in them through shares rather than purchasing a residential or commercial property directly, and income is earned as dividends.
Smart investment strategies in real estate investment trusts are ideal for individuals who don’t have the resources to finance a property but still want to explore the real estate market.
4. Diversify Your Portfolio to Manage Risk
Just like starting a business, smart investment strategies can be risky. Sure, you’ve done all your research and analysis, and the odds look in your favor. However, the market is volatile, and random economic and political events can instantly shift the trajectory.
That’s why it’s always critical to have a diversified portfolio so that if one asset takes a hit, you can fall back on something else.
As an entrepreneur, spread your investment funds across multiple instruments. That includes real estate, stocks, and digital assets. Aside from multiple individual investments, you can also diversify your portfolio with Exchange-Traded Funds (ETFs).
ETFs basically combine multiple instruments into one asset. As such, with a single investment, you’re spreading your money across diverse markets and eliminating the risk that comes with investing in a single instrument.
5. Have an Emergency Fund Separate from Investments
While it’s important to set aside money for smart investment strategies, you should also consider having an emergency fund that’s independent of investment resources. Why is this critical? Because entrepreneurship comes with challenges.
There will be months with low sales and revenue losses. When you face these tough times, you might be tempted to liquidate your investments to meet some needs.
However, with an emergency fund, you have a safety net to fall back on, thereby saving your investments. An emergency fund also ensures you don’t end up taking debts that can cripple your finances and even eat into investment returns.
So, while a savings plan might not look like a high-yield strategy, it’s a move that will safeguard your wealth.
Final Thoughts
Building a business is a sure pathway to generating consistent income, but entrepreneurs cannot solely rely on their startups for sustainable wealth. Companies can fail; if this happens, you need a plan B. That’s where investments come in.
Smart investment strategies offer opportunities to diversify your income stream and safeguard you from the potential risks associated with running a business. However, do your research and consider your investment goals before picking an asset. Rather than focusing on one instrument, consider building a diversified portfolio over time.
Photo by Austin Distel; Unsplash
