Don’t Invest Conservatively IF…

Recently, I had a client ask a question concerning his 10-year plan. He’s planning to sell his business, so we are working toward growing the value of the business in preparation for the eventual sale. Along with his business, he has this really, small retirement account. Which if I’m being honest, most business owners are not focusing on their retirement accounts. I’m a business owner that doesn’t concentrate on funding my retirement account. I have accounts set aside for that purpose, however, for the most part, I pour my time, energy, and income into my business. In fact, most business owners do that.

So this client came in the other day and said, “Justin, I know that I’m selling my business in the next ten years, and this is already something I’m working on. So should I become more conservative in my portfolio as I reach that magical sell date?”

What he’s talking about is his retirement accounts, like his IRA and Roth and things of that nature. Now you may think you know the answer. For the most part, if this is you, then yes, you probably do want to start scaling that back. However, in this particular business owner’s case, he needed a 9% return on his portfolio and the sales price of his business at a certain multiple and value, in order to reach, his “optimal” retirement goals.

Now, when I say “optimal,” this guy wants to travel the world and spend a lot of money. So if he doesn’t sell the business for what he’s expecting or he doesn’t necessarily reach that 9% return, then is it the end of the world? No, he is still pretty solid as far as his business, but if he wants to achieve that optimal lifestyle he needs to stay a little bit more aggressive and let his accounts ride for another couple years—four, five, six, possibly even seven years. Then within about a two to three-year period, as we start shaping up the business, getting it in a position to transition and sell at the value he is hoping for, to reach that ultimate retirement goal; then at that point, we will start dealing with specifically his investment accounts.

Until then, it’s a matter of driving the cost down as low as possible and driving the return up as high as we can to achieve the absolute best return we can for him within his risk tolerance.

Again, always is never always! It just depends on your specific situation. If this sounds like where you are, in that 5-10 year period before retirement, look at your goals and speak with your CERTIFIED FINANCIAL PLANNER™. Go over the details and find out exactly how you should be investing in this very vital time of your life.

If you have questions about your specific situation, contact me and let’s work to make your retirement as Financially Simple as possible.