You sold your business? Congratulations! Now you can make the switch from working for your money every day, to making your money work for you, every day.
However, if you have sold your business, you may be finding it a little difficult, mentally, to make the change from receiving a regular paycheck from your (former) business, to your new situation. Perhaps now would be a good time to take inventory and identify existing assets and income streams. What do you have working for you? Lump-sum proceeds from your business sale? Regularly expected payments from your business sale? Existing savings or Certificate of Deposit accounts? Income-producing property or existing investments? Social security benefits? Other pensions or annuities?
Life and Money After You’ve Sold Your Business
It will be very important for you to identify what you have and compare it with what you will need. Back in November 2019, we wrote about this in our blog post, “Will Selling Your Business Fund Your Retirement?” In that blog post we raised questions such as these:
- Will you be looking to maintain or simplify the lifestyle you enjoy now?
- How much income will you need or want in retirement?
- Will you want a fixed amount of income every month or a variable amount that you can access on-demand?
These are questions and answers to discuss with a Registered Investment Advisor (RIA). With your RIA, you can talk together about how careful or aggressive you want to be (or can be). A key component of those conversations is assessing your risk tolerance. For example, a good Investment Advisor will come to understand the boundaries of your mental, emotional and psychological well-being. As we are on record saying, the stock market is the best place to grow your money. However, it is not a smooth, easy road. It has ups and downs that must be carefully navigated.
In addition to our conversations with you, we will also seek input from your CPA, and then we can model different strategies for building an investment portfolio to meet your goals.
Park it, Grow it Conservatively or Grow it Aggressively?
If you have money parked in savings accounts or CDs, you will be lucky to earn 2% per year, or more. Furthermore, with interest rates dropping, your money will barely keep up with inflation in these settings. While it seems safe, it is akin to treading water.
One of the safest investments you can make are A-rated corporate bonds (or, similarly-rated municipal bonds may also be appropriate). The returns are on the lower end, but there is very little risk involved. As we mentioned in our most recent Market Update on March 2, we often are asked why we even bother with bonds. Our answer: “While bonds are not expected to be our highest rate of return vehicle over the long-term we own the asset class to provide diversification and stability to the portfolio.” The recent market correction that began in late February due to Coronavirus fears proved again the value of including bonds in investment portfolios.
If your situation allows a more aggressive growth strategy, then we would consider growth-minded stocks and/or dividend-paying stocks, or stocks that provide both growth and regular dividends.
There are also additional strategies that we can consider, that may include gold, real estate, hedge funds and/or private equity opportunities..
Sold Your Business? Talk with Registered Investment Advisors
As Registered Investment Advisors we can provide experienced, trustworthy advice on how to grow the money after you have sold your business. We are obligated by fiduciary duty to always put your interests ahead our own. Because of this fiduciary responsibility, you can feel safe that our advice is designed for your best interest.