Wealth Income Solutions for Entrepreneurs (WISE)
Investment solutions that cater to entrepreneurial mindsets
When considering investing in a post-pandemic recovery, new studies are showing that entrepreneurs consider specific investment models that cater to their unique and timely needs. Entrepreneurs have many more considerations and outside forces to contend with than the traditional employee, so it stands to reason that the flexibility and liquidity of their investment are just a couple of key considerations to their preferred investment choice.
A closer look...
WISE INVESTMENTS
Flexibility in funding the investment
In the real world, as an entrepreneur, income can show up sporadically so the investment must be receptive to isolated deposits that may be months apart. Often contractual obligations slow the timeline of compensation and, at the same time, can be in conflict to the funding obligations of most traditional investments. Some of the most well known investments base their funding schedules off of the “W2 employee”, where income is dispersed in biweekly or monthly installments like clockwork. Entrepreneurs and the self-employed don’t follow that clockwork-timetable. In fact, it’s quite the opposite. This is why the payment-schedule of the investment you choose is critical for long-term success.
Principle-protection and effective stop-loss provisions
Another key consideration is principle protection, or the ability to stop the bleeding of precious liquidity in periods of market downturns. An entrepreneur’s liquidity is their skin in the game. Whereas, the traditional employees skin in the game is to show up to work 40 hours a week and to do the best job they can day to day. In times of market downturns, entrepreneurs can’t rely on monthly checks for long-term stability, so immediate access to those funds, regardless of the financial climate, could be the difference of their income moving forward. An investment that can utilize immediate stop-loss provisions in their portfolio to protect from eroding assets in a market downturn can be seen as a huge win-win for many self-employed.
Access to liquidity without penalty
Most tax-deferred investments such as Roth IRAs or Traditional 401ks often come with penalties for accessing the funds prior to the age of 59 ½ years old. Under the age of 59 ½, the IRS will penalize you 10% for each withdrawal, outside of emergency provisions and a couple of unique scenarios, that is taken as income. Again, provisions put in place to accommodate the traditional W2 employee. In fact, many employees will pull these funds out in times of layoffs or departure from a company, which conveniently exempts them (in many cases) from being exposed to the penalty. What if there was a way to access the funds at any time, without penalty, and without taxable consequence?
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