Today’s youth differ from older generations in many ways. One remarkable thing about millennials and Generation Z is that they explore entrepreneurship earlier compared to Gen X and Baby Boomers during the same age. We have more young entrepreneurs these days due to the younger population’s willingness to take risks at an earlier age.
Today’s generation uses the prospect of financial stability as their primary motivation for building their businesses early. They have seen their parents struggle financially and don’t want to experience the same hardships. Since a regular nine-to-five job can’t guarantee one’s ability to build wealth, they take the next step by taking risks.
The problem is, establishing a business alone is often not enough to fast-track one’s success rate. Successful business tycoons often tell us that one of the reasons they managed to build wealth is having at least three sources of income. They are also diversifying their portfolio to manage risks.
Even with this knowledge, many young entrepreneurs are afraid to diversify their portfolios. Everyone has their own reasons they are yet to explore investment diversification despite the success of their existing business. The following are four reasons that stop young entrepreneurs from building their wealth.
Fear of Acquiring More Debt
Not all debts are bad. When you use debt for something that can help you generate more money in the long run, you are investing in a good kind of debt. But while some entrepreneurs took a big leap of faith by applying for a loan when they opened their business, not many are willing to undergo the same process all over again to make another investment.
Some found that paying back a business loan can be a headache. This is especially true with entrepreneurs who had to wait for a long time before their business took off and managed to pay back their lender. When someone lacks the personal capital to take another risk, the usual tendency is to skip making the investment in the meantime.
Preparing yourself for making another investment involves doing your own research. There are many reliable sources, both online and offline, to get you started. The problem is, with the amount of information there is to take, young entrepreneurs, can easily get overwhelmed. This can confuse them and make them reconsider whether focusing on diversifying their portfolio or sticking to the industry they already know makes better sense.
The key is to know where to start, who to follow, and what kind of information is worth knowing. Start with learning from those who know what they are doing and already have a track record in their chosen endeavors.
It is crucial that you keep your investments well-balanced. Learn to cope with information overload. Avoiding over-diversifying your portfolio will also enable you to get the most out of your investments.
Inexperience Managing Multiple Investments
You might have studied the basics of building and running your own business. But when venturing other investment forms to diversify your portfolio, they can quickly split your focus and attention. So, what young entrepreneurs do is take one step at a time by first focusing on their existing business.
The good news is, there now exist specialized services that will enable you to maximize wealth-building opportunities. Take the investment management services offered by Jacobsen Capital Advisors as an example. By allowing the pros to manage your investments, you can focus on the more important things and plan portfolio diversification strategies to boost your wealth-building.
Such services offer evidence-based research. This, in turn, helps entrepreneurs like you better understand your risk tolerance, identify investments that will suit your needs, and monitor your accounts effectively. You can continue growing your wealth and efficiently monitor your progress from start to finish.
Limited Networking Contacts
Younger entrepreneurs often are at a disadvantage regarding the number of networks they can turn to when building wealth. Unlike when someone starts a business in their 40s, young entrepreneurs could use their connections to explore better wealth-building options. This is especially true if you focus on building a network under your industry.
Luckily, expanding your network is made more effortless thanks to today’s technology. With a few searches and clicks, you can boost your professional network and embrace opportunities. Thanks to today’s technology, reaching industry leaders is easier.
One can start expanding their network by joining professional networking sites and building their network from there. Don’t forget about your current network. Ask for their referrals, and don’t forget to do the same for them.
These are but four things that are stopping young entrepreneurs from building their wealth. Capital issues, fewer networking contacts, information overload, and multiple management investments are scaring them from building their wealth through portfolio diversification. But once you overcome such challenges, it will be easier to make the right decisions to further your wealth-building efforts.