5 Tips for Building an Investment Portfolio as a Business


Investing, like any industry, has its own rules, regulations, and language. It can be difficult to navigate all of the requirements and fees and other information regarding an investment portfolio without some help. Luckily, there exists a wealth of information on the web and abroad that you can utilize to build a profitable portfolio. From financial advisors to finance blogs, help is available if you look for it. Here are five tips for building an investment portfolio as a business.

  1. Take an Honest Inventory of Your Finances

The first step of building any portfolio is taking a long (and honest) look at your finances. Where are your assets located? How are they being managed? What is the overall value of all your assets? Do you need assistance in managing them?

These important questions will help you make several decisions, one being whether or not you need a financial advisor to help plan or manage your portfolio. Your portfolio may include such items as your retirement account, options trading, stocks, etc, so bringing a professional in to take an unbiased look at your finances can help you reevaluate.

Include every asset the business owns, including vehicles, stocks, bonds, as well as anything you owe. Many businesses started out with a loan, so if you still owe money on your loans you need to include them in the assessment as well.

Taking inventory sets you up to create financial goals for the business. Perhaps you want to pay off that initial business loan in the next five years, or maybe you’re looking to expand or launch new products. Whatever the case, your finances can benefit from an honest evaluation.

  1. Hire An Advisor

A financial advisor can be an excellent resource when you’re evaluating your business finances. The unbiased, third-party information advisors can provide will help you make more informed decisions and develop effective plans for reducing what you owe.

Advisors can be digital (or robo) advisors or human advisors. In the case of business portfolio development, it’s probably a good idea to hire a human advisor, since you’ll likely want to discuss your finances and goals with an actual person.

Be sure to discuss your advisor’s fees before hiring. Many advisors work on a percentage-based fee structure, meaning they’ll charge fees based on a percentage of the assets under management. Usually, the fee is around 1% of your assets but can be more or less depending on the advisor. Other fee structures include hourly retainer or a flat rate.

If you’re looking for an advisor in LA, check out this information on the best financial advisor for LA.

  1. Reduce Costs

Of course, one of the most important aspects of building and maintaining a portfolio is to reduce costs as much as possible. Reducing costs puts more money in your pocket (or into your portfolio) and gives you some wiggle room for the business.

Remember that investments come with fees, sales loads, and costs for advisory or management of the portfolio. Every dollar you spend on these expenses is a blow to the value of your portfolio, so you’ll want to reduce costs across all areas if possible.

This could mean finding a different advisor with a more manageable fee structure or choosing a different brokerage firm to work with. Costs can compound over months and years, so what started out as a few hundred dollars can wind up costing you well into the thousands of dollars given enough time.

Keep business costs low, as well, so you have enough of a profit to work with for your investments. Reducing business costs can be as simple as opting for online sales instead of a brick and mortar location, or cutting unnecessary labor costs. A good advisor will assist you in identify high-costs associated with running your business and help build a plan to reduce those expenses.

  1. Don’t Put All of Your Eggs In One Basket

You’ve probably heard this term before, and it’s absolutely true when it comes to investing. Investing in only one asset is a good way to lose a lot of money when the market changes (which will happen at some point). Having several assets in your portfolio ads diversity, which can help keep your money secure during a downturn.

Speak with your advisor about which assets you should invest in given your financial situations. Some investments are more secure than others, so be sure to diversify to maximize your chances of a return on the investments.

Keeping your assets secure is equally as important as knowing where and how much to invest. If you keep making poor investments and losing money, it may be time to speak with or hire an advisor to better assist you in managing and diversifying your portfolio.

  1. Don’t Forget About Taxes

Certain assets (like 401k’s and Roth IRA accounts) are taxed differently from each other, which can make tax time confusing and frustrating if you end up owing. It’s vital that you’re aware of how your assets are taxed and when those taxes come due.

This is another situation in which an advisor would be of assistance. Advisors are well-versed in tax requirements of investments so you can be sure that you’re taxing investments correctly. The last problem you want to run into is back taxes or owing significantly more than you thought on an investment.