What’s Your Asset Allocation?

What’s Your Asset Allocation?

Most entrepreneurs don’t know their asset allocation. It’s one of the first things we help calculate when we bring on a new client. Why is this so important?

Entrepreneurs should concentrate their investments to create wealth and diversify them to protect it. Most concentrate on their operating business. That’s not often a “decision” as much as something that has happened through momentum and growth. 

When they have a liquidity event, their asset allocation changes dramatically. All of a sudden, there is a lot of cash and not so much private equity. If you haven’t spent much time investing outside your business, it can be challenging and scary to figure out where to invest. Other businesses, making loans, buying stocks, crypto, gold???

It all starts with developing your asset allocation – how much of your net worth do you want in any one type of investment? It’s a critical question. In order to make a wise decision, there are lots of factors to consider. Namely, how much cash flow will you generate from your effort and how much do you need from passive investments.  On top, you need to think about liquidity, accessibility, volatility, and your own personal comfort level with each asset class.

We help entrepreneurs think through this time and time again. If you need any help, contact us at AskFreedom@FreedomFamilyOffice.com.