How to Grow the Money You Received from Selling Your Business
You sold your business! Now, how to grow the money you received from selling your business?
Of course business deals can be structured in many different ways, but for the sake of today’s conversation, we’ll assume you have received (or will receive) a lump sum payout for the sale of your business. With that money now in hand, how do you grow the money you received from selling your business?
Well, it depends on how much you want it to grow.
How Much Do You Want Your Money to Grow?
If you want to earn more than 2% per year (typical of savings accounts, certificates of deposits, etc,) you will need to invest, to some degree, in stocks.
This is where conversations with a Registered Investment Advisor really comes in handy. Together, you can assess how conservative or how aggressive you can or want to be in growing your money. A conversation to assess your risk ability includes discussion about how much risk you can mentally, emotionally and psychologically take on while still being able to sleep well at night.
There are different strategies we can employ to grow your proceeds. Each depends on your tolerance and ability to take on risk. You can grow your business proceeds with growth-minded stocks which gain value as the share prices increase. Or, you can grow your business proceeds with dividend stocks, which distribute profits to shareholders. Or, we can help you find stocks that both appreciate with time and pay dividends to shareholders.
If playing it safe is more your style, you can look at A-rated corporate bonds. Or you can also look at similarly rated municipal bonds if they are more appropriate for your situation. We generally recommend bonds with terms of five years or fewer, and “laddering” the bonds. This means that some bonds mature in three years, some in four years, some in five.
Later, as you grow comfortable with the investments being made, you could look at alternate strategies that may include real estate, hedge funds and/or private equity.
Talk with a Registered Investment Advisor
As Registered Investment Advisors we can provide thoughtful advice on how to grow the money you received from the sale of your business. We are bound by a fiduciary duty to always put our client’s interests above our own. This means you can trust that the advice received will always be specific to your best interests.
Ned Karren is a Chartered Financial Analyst and a Registered Investment Advisor. He is a founding partner at KKRA, opening the firm in 1983. Ned earned a degree in Economics at BYU (1967) and an MBA degree from Northwestern University (1969). He is a portfolio manager and holds primary responsibility for the KKRA’s Growth Equity Strategy.
Tags: kkra, Selling Your Business