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If you're running a functioning business why wouldn't you plough the money back into the business?
by yen223 5y ago
If you're running a functioning business why wouldn't you plough the money back into the business?
- sokoloff 5y agoEggs and baskets. If I owned a company that provided for my current income, I would not want to place myself in a position where the faltering of that business killed both my current income and my retirement at the same time. By all means plow a lot of it back into the business, but there’s good reason to pull some out over time as well.
- gumby 5y agoHedge your risk. Investors get diversity (portfolio) spacially: they get a piece of lots of businesses. Entrepreneurs diversify temporally: they can reasonably only put their time into one thing at a time, and only a few over a lifetime. So if your business is doing well you can avoid putting all your eggs in one basket by investing some cash personally outside the business. And the easiest way is to jus put it into an index fund and then concentrate on your business.