You’ve put your all into grand dreams of growing your nest egg, whether through building your business, or through enhanced stock performance from the past several years of strong public market returns, and are now to the point of realizing or considering a liquidity event. Realizing this liquidity is empowering and greatly rewarding, after all, it’s a direct result from your hard work, time, and energy over the years!
With liquid cash on hand you have just widened your investment opportunities greatly.
Check out the five things listed here to develop an outline for your plan of action!
- Embrace Your New Role as A Passive Investor
For years, even decades, you have worn the hat of active owner or investor. At the end of the day, you were the one responsible for making the call and ensuring it was the best play at your company or within your portfolio.
Now it could be time to do another important hat: passive investor.
With excess capital from your liquidity event, it’s time to put it to work, but it could require you to hand over the keys.
To protect your wealth over the long run, find experts well experienced in wealth preservation for High Net Worth Investors.
These advisors you choose are a valuable tool, but remember, the reality of being a passive investor is anything but passive. You may be ceding some responsibilities to third parties, but at the end of the day you make the final decisions.
- Build Your “Board of Directors”
Like any business, you need a personal “board of directors” to provide expertise and advice to help you grow your capital to the next level and for generations to come.
Don’t forget the key players to include on your board: financial advisors to provide guidance on building and balancing a portfolio. Tax professionals and attorneys to build an efficient tax and estate plan. You may be familiar with these types of advisors, but there’s another category of board member you should have if wealth preservation is on the agenda: Alternative Investment Managers.
Alternative investment managers can provide the specialized knowledge and network required to compete for the strongest, typically “private” opportunities that exist. Instead of struggling to build an edge on your own (while other obligations still require your time/attention), capitalize on the knowledge/network capital of others to build your portfolio.
- Build A Truly Diversified Portfolio
Diversification into assets with low correlation to the public markets can come into play when considering what to do with proceeds from your liquidity event. With interest rates at historic lows (and rate increases likely on the horizon), alternative investment vehicles such as real estate can provide returns that historically perform more strongly in inflationary environments.
Volatility risk is another factor to consider when assessing alternative investments. With public markets potentially showing high levels of volatility, consider private real estate, which historically has shown consistent returns with low volatility relative to the public markets.
- Even with A Team of Experts, Remember the Golden Rule of Wealth Preservation: Do Your Own Due Diligence!
A team of advisors can provide expertise and insight, but at the end of the day, the buck stops with you. Remember the Golden Rule of wealth preservation: Do Your Own Due Diligence!
Apply the inner skeptic that served you well when it came to making decisions for your business and past investments. Use, but don’t depend on, your personal boards of directors’ advice.
- Invest in Yourself by Finding the Smartest People You Can Find
Leveraging the knowledge and insight of others will prove invaluable to your wealth preservation strategy. But to get to the next level, it is imperative you develop your personal expertise in areas you may currently be inexperienced.
Surround yourself with the smartest people you can find and leverage their knowledge, experiences, and relationships to enhance your own self. Private real estate investing has long had a steep learning curve, where “mastery of the game” may require decades of experience. Picking up this knowledge from seasoned veterans can speed up this learning curve, making you a more well-rounded investor ready to assess and deploy capital to a myriad of opportunities.
To start developing your knowledge, check out our article, 17 Questions to Ask Before Investing Your Money, for the types of questions you need to ask before committing capital to a private real estate investment.
How MLG Capital Can Help You After Experiencing A Public Market Liquidity Event
MLG Capital is more than happy to leverage our 30+ years of existing relationships to find candidates for your personal board of directors. Once you have built your board, we’d love to have a conversation with your personal advisors to see if our investment strategies fit within your short and long-term objectives.