Entrepreneurs are a different lot. And the way they invest needs to be different. The conventional risk profiling applied by financial advisors or robo advisors does not work because they do not account for the risk entrepreneurs take in their ventures. I believe, entrepreneurs should play it safe when it come to investments – to balance the risk they take in their startups. Now, this may not apply to late stage entrepreneurs or entrepreneurs who are well funded and take good salaries.
Here is a model portfolio I have created for myself.
I have split my investments into two parts – debt and equity. Considering that I want to take safe bet for next 3 years, I have allocated around 70% for debt and 30% for equity. Equity can very volatile and to keep my portfolio safe, I have restricted it to 30%. Even my debt component is safer because I invest only in short term debt.
Also to take advantage of tax implication on equity and debt funds, I have invested in balanced fund (they are considered equity funds and taxed accordingly). To know more about taxation on mutual funds, read this – Tax on Mutual Funds.
|Birla SL Floating Rate – LTP||Ultra Short Debt||20%||Ultra short term for my emergency needs.|
|Birla SL Treasury Optimizer||Short Term Debt||40%||Low risk debt but slightly better returns|
|HDFC Balanced Fund||Balanced||40%||Good balanced fund and optimized my tax for the debt component|
So far this portfolio has given me 12.81% per annum (at the time of writing this post). I moved to this portfolio start of the year. This is what I expect from this portfolio in next 3 years.
|Duration of Portfolio||Expected Returns||Risk|
I think entrepreneurs should take two types of Insurance – Term Life insurance and Health insurance.
|LIC eTerm||Term Insurance||Most reliance insurance provider. Also e-Term policy is lot cheaper than other policies.|
|ICICI Lombard iHealth||Health Insurance||Found it to be good considering the benefits they provide and claim settlement ratio.|
I do not recommend entrepreneurs taking loan. I use credit cards but that is more for the convenience they offer (and the rewards points 🙂