Don’t Bank Your Retirement on Your Business

Investing in your own business makes sense. Many businesses achieve significant growth each year. However, when you consider that many small businesses fold every year, it becomes clear that banking your retirement solely on the success of your business might not be the best idea. There is no guarantee that your business will continue to grow or even maintain its current value. If your business is worth less than you were counting on at the time you planned to retire, you could be forced to continue working or sell it for less than what you were expecting.

Business owners often assume that their businesses will be their main source of retirement funds, but that strategy can be riskier than you think. It’s generally not wise to put all your eggs in one basket. Broadly diversifying your assets may help protect against risk.

Diversification involves dividing your assets among many types of investments. Putting all your money into a single investment is risky because you could lose everything if the investment performs poorly — even if that investment is your own business. Of course, diversification is a method used to help manage investment risk; it does not guarantee against the risk of investment loss.

Consider what would happen if you were planning to rely solely on the sale of your business to fund your retirement, only to have the U.S. economy fall into a recession about the time you planned to retire. If one occurred when you planned to retire, it could affect the sale of your business or the income it generates for you.

Likewise, there is no assurance that a larger competitor won’t overtake your market, or that demand for your business’s goods and services won’t weaken because of new technology, rising energy prices, consumer trends, or other variables over which you have no control.

Your business is almost certain to provide some of the money you need to retire. By building a portfolio outside your business, you are helping to insulate your retirement from the risks and market conditions that can affect your business.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.

Charles Richard Derrick, Registered Representatives of Park Avenue Securities, LLC (PAS). Securities products and services are offered through PAS, 954 Ridgebrook Road, Suite 300, Sparks, Md. 21152, 410-828-5400. Field Representatives, The Guardian Life Insurance Company of America, New York, New York. PAS is an indirect, wholly-owned subsidiary of Guardian. Derrick Financial Group is not an affiliate or subsidiary of PAS or Guardian.

Stephen Lee Derrick and Charles Lee Derrick, Registered Representatives and Financial Advisors of Park Avenue Securities, LLC (PAS). Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor, 954 Ridgebrook Road, Suite 300, Sparks, Md. 21152, 410-828-5400. Field Representatives, The Guardian Life Insurance Company of America, New York, New York. PAS is an indirect, wholly-owned subsidiary of Guardian. Derrick Financial Group is not an affiliate or subsidiary of PAS or Guardian.

The information on this site is intended for the residents of DC, KY, MA, MD, ME, NC, PA, and VA. The financial representatives of Derrick Financial Group are not licensed to sell insurance in all 50 states. To find out if an agent is licensed in your state, please contact Lee Derrick at 410-263-9708.

Registered Representatives securities licensed in DC, KY, MA, MD, ME, NC, PA, and VA. This website is strictly intended for individuals residing in those states. No offers may be made or accepted from any resident outside these specified states.

Neither Guardian, nor its subsidiaries, agents or employees provide tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.

The Living Balance Sheet ® and the Living Balance Sheet ® Logo are registered trademark of The Guardian Life Insurance Company of America (Guardian), New York, NY. The graphics and text used herein are the exclusive property of Guardian and are protected under U.S. and International copyright laws.

The information or opinions contained in this Internet site should not be construed by any consumer and/or prospective client as an offer to sell or the solicitation of an offer to buy any particular investment product. The information contained herein is directed solely to those individuals who reside in jurisdictions in which the representative is registered in the state where the consumer and/or prospective client reside. Any subsequent direct communication with a consumer and/or prospective client shall only be conducted by a representative that is registered in the state where the consumer and/or prospective client reside.