Entrepreneurs and concentrated wealth: How to manage it

In some ways, the principles of a successful entrepreneur are poles apart from those of a successful investor.

Entrepreneurs commonly pour everything into their business in order to start it, scale it and potentially sell it, including their time, talent, and treasure (capital). Business owners customarily concentrate their resources into the business. So, the idea of spreading risk into companies they don’t control would be a nightmare for many entrepreneurs. 

If entrepreneurs are to invest in other ventures, they are likely to only do so when the company is well established and generates sufficiently high profits to provide surplus capital beyond the business’s needs.

However, by contrast, the general maxim in investing is diversification – spreading capital across asset classes, sectors, and regions – is the only “free lunch.” – says UBS.

The latest article written by UBS examines ways that entrepreneurs can manage a concentrated position that benefits their business and their wealth. Covering topics that include; What business owners can do to manage the risks of their concentrated stock position, rebalancing risk exposure, reducing the volatility of the concentrated position, and factors that can influence the choice of wealth management tool.