Make Sense of Your Net Worth
Make sense of your net worth
You may long ago have developed an investment philosophy that guides the way you handle your wealth. But, if you are like many entrepreneurs whose net worth was largely tied up in their business, you may not have worried much about how to invest your money-until now.
If you are in the latter category, you should give careful thought to developing a sound investment philosophy that gives direction, flexibility, and meaning to the handling of your now substantial financial assets. It’s like your own customized guidebook that establishes where you want to go, how you want to travel, and the tools or vehicles that will take you there. Here are five critical components of a successful investment philosophy:
- Establish detailed goals and objectives for what you want your money to accomplish for you and your family. You may want to make an actual list which you can then prioritize by importance and urgency.
- Decide on your investment timeframes for each of those primary goals. Your investment choices will vary significantly depending on your time horizon.
- Determine your entire net worth across all of your assets, including home equity, pensions, 401(k), personal savings, insurance, annuities, and traditional investments.
- Decide how much money you will actually need to achieve each of your goals. You can then determine the appropriate investment tactic in each case.
- Develop an understanding of the type of investor you are. Everyone has a different level of risk tolerance. Therefore you should develop an investment philosophy that reflects the amount of risk that is acceptable to you. Of course, you are likely to accept more risk to achieve longer term goals.
We’re here to help you take action on each of these items, preparing us to create an investment philosophy that will serve as the foundation for successful wealth management for decades and even generations to come.