7 Small Business Retirement Investments Ideas

Owning a small business is all about planning. The clearer your goals are, and the more planning you have, the more likely you are to be successful. You as an entrepreneurs must understand that one day, just like anyone else, you are going to have to hang your cleats. In order for that to happen in a successful manner, you must plan accordingly.

The plan you choose will depend on the size of your business, your age, the lifestyle you want to have once you retire. There are different websites that will assist you calculate how much you should invest over the years.

Here are seven tips for your to consider when planning for your retirement.

 

1 – Real estate investment

This is by far my favorite one. Purchasing real estate and collecting rent is a very good manner to acquire passive income. There is a wealth of information in real estate investment in the internet. Take time, research, and go for it. There are many upsides to this kind of investment, including some good tax breaks. From all of the options, by far this is my favorite one. 

 

2. Solo 401(k)

With about 55 million American workers participating in 401(k), it is by far the most popular retirement plan. Solo 401(k) is essentially the same as traditional 401(k), however only self-employees and spouses are eligible for this particular plan. 

If your business has over $250,000 in assets the account holder has to file an annual report. 

 

3. Traditional IRA or Roth IRA

There is a major difference between the two of them. Traditional IRA are pre-tax dollars investment, and it is tax deductible. Roth IRA contributions, on the other hand, are made after tax and withdraws in retirement are tax-free.

Furthermore, contributions to Roth IRA has limits and are made according to your current tax bracket. Which makes it a very good option for self-employed folks. However, if you expect to be at a lower tax bracket when you retire, a Traditional IRA might be a better for you. 

 

4. Target-Date Fund

Also known as lifecycle or age-based fund. These type of funds allows the investor to name a date when it will begin to utilize the money invested. Based on the date, a portfolio manager will create a plan allocating the funds properly, and it automatically rebalance between stocks and bonds overtime.

It is a great type of investment for someone who does not want to worry about consistently monitoring their investment. However, the mix could mean less flexibility to shift investments into promising trends. 

 

5. Build a massive save

According to a Manta, over 37% small business owners do not make enough profit to invest in their retirement. Ensure your business is not overspending in any area. Track all expenses, as well as the income. Save as much as you can, it is going to be needed eventually. 

Save all you can, make your choice and invest. Once the money is invested, leave it alone and let it work on your behalf. 

 

6. Revisit your portfolio

Due to the volatility of the market, your portfolio value will change with time. It is important to keep revising your plan and revise it when necessary. Make adjustments in accordance with the market trends. Further, make appropriate changes when major life events take place, such as having a child, buying property, etc. 

 

7. Diversify your portfolio

Spread your investment among several assets, as a safeguard against volatility. Invest in a mix of stocks, bonds, precious stones and even currency.

If you are far from retirement, go aggressive, the market will always turn, and you will have time to recover. If you are older and near retirement, go conservative, more towards bonds. 

 

As a business owner it is paramount for you to understand that importance of saving for retirement. Specially if you are one man show, and your family completely depends on your business to survive. 

Running a business is like entering into uncharted territory. You must always remember…. stay bold, stay fearless.