Financial planning for an entrepreneur

Planning for retirement, and structuring your financial portfolio in general, becomes quite challenging when you are not earning a consistent income.

Many of our calculations and recommendations are based on a percentage of income to work out your replacement ratio. Being an entrepreneur, your experience may not always look like that. Not only do funds get reinvested into the business, but income can also vary, substantially at times.

Here are a few recommendations on how to optimise your portfolio as an entrepreneur:

Choose the right investment platform that provides flexibility.

Choosing a wealth platform that does not include penalty structures is very important. This is something to look out for in general.

Should you want to pause or amend your contributions in certain months, no negative penalty structures will be applied to your portfolio.

Plan for the shorter term

You can structure a well-diversified investment portfolio that is completely accessible for short-term business expenses and opportunities.

Optimising and planning your asset allocation will be important here. Include equity exposure, both local and offshore, for long-term capital growth as well as cash and bond exposure for short-term planning.

The allocation can vary depending on the plans for your business and the projects you wish to take on.

Ensure you have an emergency fund in place

An emergency fund can still be a well-managed portfolio. As it is an emergency fund, chances are you might not use the entire fund in the short term.

Therefore, at least optimising your returns is recommended.

Do not just leave these funds in the bank, unless you require immediate liquidity. The accessibility of a voluntary investment can take three to five days.

Ensure you are protecting your ability to work and earn an income. As an entrepreneur, your main asset is generating income. Ensure you are protecting yourself against illness and disability.

Appoint a strong auditing team from the start

There are many tax benefits you can optimise on an annual basis within your business.

Ensuring you receive the correct advice and guidance on this from the start will save you a lot of time and money!

Work with a wealth adviser who understands your business goals and can build your portfolio accordingly. — Moneyweb.