It might surprise you that most entrepreneurs are financially illiterate. This happens for a beautiful reason: entrepreneurs are dreamers by nature, capable of imagining a completely different reality and seeing opportunities where none appear to exist. Successful entrepreneurs work for mission, not money.
Plus, entrepreneurs are natural risk-takers. They are willing to bet big – maybe even bet everything – on a great idea. Add it up, and these traits make a great visionary, but don’t translate well to successful long-term investing.
A wise investor takes a strategic, long-term approach, and avoids concentrated investments. That would be the wrong kind of risk, what I call silly risk. Diversification is key to growing wealth in a healthy, sustainable way. Concentrated investments are mere speculation.
Entrepreneurs learn to manage cash flow and the growth of their business, but too often they forget to bring the same savvy to their personal finances. While growing your business, you must also keep in mind that you need to be preparing for retirement. Betting on a lotto ticket with one business is not a sound retirement strategy. In retirement, your savings become your paycheck. If you don’t take care of your future, who will?
You must be just as proactive for the sake of your financial health as you are for your business.