Why Every Entrepreneur Should Have an Investment Portfolio | Pocket Byte #19

In this Pocket Byte episode of The Wealth Effect, we explore a crucial yet often overlooked aspect of entrepreneurship: investing beyond your business. An often overlooked pillar of entrepreneurial success is the investment portfolio. As an entrepreneur, you're already betting on yourself and your business. But what happens when the market shifts, clients pause spending, or growth stalls? As today’s episode reveals, building an investment portfolio is not just wise; it’s essential.

We explore:

• Why business success doesn’t always equal financial freedom
• The dangers of tying your entire net worth to one asset
• How diversification can protect and grow your wealth

Whether you're just launching or already scaling, this episode will challenge you to think differently about your financial future.

Listen in and start building wealth beyond your business.

Episode Transcript

(00:00):
Welcome back to The Wealth Effect, where

(00:01):
we explore strategies
for building wealth.
I'm your host, Green Moon, and
today's episode is for entrepreneurs.
If you ever poured your heart into
a business, sacrificed sleep, time,
all to make it a reality,
this one's for you.
We're here to discuss a critical element
that's often overlooked, and that being
why every entrepreneur should have a

(00:22):
solid, diversified investment portfolio.
An investment portfolio, well-designed and
maintained, is not merely a hedge against
the possible
collapse.
It's about crafting
a safety net.
It's about understanding with clarity what
true and enduring freedom is, not from
reckless gambling or betting everything

(00:44):
on a single outcome, but from the art of
diversifying
your bets.
Let's fill
your pocket.
The illusion of reinvesting
everything back into your business.
There's a common belief among
entrepreneurs, that being, my business is
my best investment.
And sure,
it can be.
You can control it, you can

(01:05):
grow it, you believe in it.
But let's step
back a bit.
What happens if
your business fails?
What happens if
market trends shift?
What if
regulations change?
Or what if a competitor
gets better funding?
The pandemic taught us that entire
industries can fail overnight.

(01:25):
Entrepreneurs who only had their
businesses, no savings, no investing,
no other forms of income,
were left with nothing.
We saw entire industries shut down
in 2020, not just underperform, but
completely shut down.
That being restaurants, gyms, salons,
event businesses, tourism, retail.

(01:48):
You think those business owners
didn't love their business?
You think they didn't
reinvest everything?
They did.
But love doesn't
prevent catastrophe.
Passion doesn't shield
you from volatility.
Meanwhile, those who diversified,
they had their cushion.

(02:08):
Putting all their capital into their
business is not bold, it's blind.
Entrepreneurs love to say, I trust my
business more than the stock market.
I have
control here.
But that control
is an illusion.
You don't control
the economy.
You don't control your
customer's psychology.
You don't control interest rates,

(02:30):
policies, inflation, or even AI
disruption.
Control is
not immunity.
The psychology
of all in.
Now, let's talk about the mindset
behind reinvesting everything.
Why do
entrepreneurs do it?
It's because going
all in feels right.
It feels like
a commitment.
And it feels
courageous.

(02:51):
We tell ourselves, if I don't
bet on myself, who will?
But here's the
subtle trap.
You mistake bravery
for recklessness.
You start to confuse emotional
commitment with financial logic.
Think about
it this way.
If a poker player goes all in
on every hand, are they bold?
Are they just

(03:11):
irresponsible?
The best players fold
more than they play.
They preserve
capital.
They wait on
an opportunity.
I'm not saying
don't reinvest.
You should reinvest,
especially early on.
But you need to
set boundaries.
The goal isn't to put
everything back in.

(03:32):
It's to put enough
back in to grow.
While putting enough aside, maybe 10,
15, or even 20 percent of your profits
should be flowing into
long-term investments.
That's how you build
wealth with a dual engine.
One engine being your
business that you control.
And another one is your investment

(03:52):
portfolio, which works as you sleep.
The entrepreneur's
greatest asset is leverage.
As an entrepreneur, you
already understand leverage.
You leverage people, time, technology,
systems, but there's
another kind of leverage.
Capital leverage.
When you invest in the stock market,
real estate, index funds, or even private

(04:14):
equity, you're leveraging
money to make more money.
A dollar you put into the market today
compounds quietly in the
background while you build
your company.
It's not about
abandoning your business.
It's about creating
layers of wealth.
Consider this.
The average millionaire
has seven income streams.

(04:35):
Most entrepreneurs
only have one.
So while you're fighting to fight fires
at your office, your investments are doing
the slow work of
wealth accumulation.
That's leverage.
That's control.
Wealth versus
income.
Entrepreneurs often
confuse the two.
You might be earning a

(04:56):
lot, but that's income.
That's dependent on the business,
on the performance, and on growth.
Wealth is
what you keep.
It's what grows
while you sleep.
So ask yourself, if your business stopped
tomorrow, how long could you maintain your
lifestyle for?
The answer tells you
how wealthy you are.

(05:16):
An investment portfolio
creates independence.
It's a backup
generator.
And beyond the money, it
gives you mental freedom.
It stops you from making desperate
decisions when things
aren't going your way.
You operate from a place of
strength and not survival.
Now let's talk
about a true story.
A story that made the rounds in Forbes,

(05:37):
Business Insider, and
across entrepreneur forums.
It's about a guy
named Jared Goetz.
A name some
might recognize.
Jared was a poster child
of e-commerce success.
He built a Shopify dropshipping
store that exploded.
Seven figures in
revenue in under a year.
At one point, he was making

(05:59):
$10,000 to $30,000 a day.
All profit, all digital,
and all automated.
He had the
dream set up.
And to be fair,
Jared wasn't lazy.
He worked hard.
He optimized ads, built
systems, and scaled the store.
He leaned into influencer marketing and
cracked the Facebook ads formula back when

(06:20):
it was still
a goldmine.
His brand, booming.
His lifestyle, flashy Lamborghinis,
penthouse, luxury trips.
He was the guy that other
founders looked up to.
But here's where
it all unraveled.
He did what most people would do
when money comes fast and easy.
He believed that the machine
would keep printing forever.

(06:42):
He reinvested everything
back into his store.
More inventory, bigger ad spends,
faster growth, no diversification,
no investment portfolio,
and no safety net.
And then it
happened.
In early 2018, Facebook made a
major change to its ad algorithm.
Targeting shifts, cost rose,

(07:04):
ad performance dropped.
Jared's conversion
rate plummeted.
Overnight, what once was $10,000 in profit
became break-even and then negative.
He tried to pivot, adjust the funnel,
but the platform had already moved on.
What once worked
was now obsolete.
Within weeks, the revenue was

(07:24):
a fraction of what it had been.
His inventory
sat unsold.
His cash flow
dried up.
His team
was let go.
His accounts
frozen.
Jared didn't just
lose revenue.
He lost everything.
Because there was nothing
outside the business.
No rental properties
to fall back on.
No investment
portfolio growing.

(07:45):
No emergency fund.
All of it.
Everything was tied
to the frail engine.
His Shopify store and
Facebook ad ecosystem.
He went from Lamborghinis
to broke fast.
And here's what he said
later on in an interview.
He said, I thought
I was invincible.
I thought it could
keep going forever.

(08:05):
I was wrong.
I didn't respect what
real wealth looks like.
Because that's
the lesson.
Entrepreneurs often confuse
income with security.
They see $30,000 a month coming
in and they think they're set.
But then what happens
when the engine breaks?
What happens when
rules change?
If all your wealth is locked up in your

(08:27):
business, you're one trend
away from a disaster.
True financial resilience
doesn't come from what you make.
It comes from what you
keep, protect, and multiply.
Jared made millions,
but he kept none of it.
Not because he was reckless,
but because he lacked one thing.
Diversification.
To his credit, Jared

(08:48):
didn't give up.
He learned and
he rebuilt.
He rebuilt
over time.
He began investing in long-term
assets, building brands, not just fads,
creating income streams
outside of paid traffic.
But he had to fall hard to learn what many
founders never consider
until it's too late.
Your business is

(09:09):
not your bank.
It's your income.
Don't wait for the storm to
realize your roof has holes.
Now let's talk about a
story on the opposite end.
Let's talk about the founder
of WeWork, Adam Neumann.
You probably
know the story.
WeWork once was the hottest startup in

(09:29):
the world, valued at
nearly 47 billion dollars.
The media called it
the future of work.
Investors were throwing
money at WeWork.
Newman was treated
like a rock star.
But then
reality hit.
The company's business
model was shaky.
The IPO filings exposed massive losses,

(09:50):
questionable spending, and
poor leadership decisions.
The valuation
collapsed.
The IPO was pulled
and Newman was ousted.
WeWork failed.
But here's the twist.
Adam didn't.
Despite the collapse of WeWork,
Newman walked away with
hundreds of millions
of dollars.
Why?

(10:11):
Because he
hedged his bets.
He negotiated
buyouts.
He sold
shares early.
He locked in
stock options.
He negotiated a
golden parachute.
He not only played the business
game, but the wealth game.
While WeWork employees were laid off and
investors lost billions, Adam became a

(10:31):
multimillionaire.
Not because his
business succeeded.
Not because his business succeeded,
but because he planned
for his personal financial
resilience.
Let that sink in.
His business
failed.
But he didn't.
Because he didn't tie his
entire net worth to one outcome.
You may not like how

(10:51):
he handled things.
You might not agree
with his leadership.
But he did
something smart.
He made sure his personal financial
foundation wasn't entirely dependent on
the success of
his businesses.
The lesson for
all entrepreneurs.
Go all in in
your vision.
Build with passion.

(11:12):
But don't
build blindly.
Set aside capital.
Invest outside
your company.
Diversify.
Build a freedom
portfolio.
Because no matter how big your business
gets, market shifts, trends change.
Trends change.
But when you plan beyond the business,
you stay free, even if
your business fails.

(11:32):
So if you're listening to this, and
you're an entrepreneur, remember this.
Your greatest asset
isn't your business.
It's your ability to make smart
decisions that compound over time.
Start investing
outside your business.
Build a portfolio like
you build your company.
With intention,
patience, and a vision.

(11:53):
Because entrepreneurship is just
the start of building wealth.
Until next time.