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Entrepreneurs Are Transforming Wealth Creation

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Entrepreneurs Are Transforming Wealth Creation

Entrepreneurs have always been the ones to attempt to make a profit via risk and initiative. 

Their enterprising methods, when undertaking potentially profitable projects, are showing that this form of investment has huge financial rewards.

In taking the first step and acting independently, entrepreneurs have become stand outs in the development of new companies.

As can be seen in the graph below,  there is continued growth by entrepreneurs in the formation of new businesses:

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In the figures reported by the Kauffman Index, there were over half a million new businesses that were embarked upon every month in 2015. 

Active entrepreneurs are poised to take advantage of the chance to start-up companies that are forming in the economic environment that currently exists.

Entrepreneurs undertake three things when investing in this area of profitability:

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  • After the start-up, they help develop the company to reach its maximum potential financially.
  • The company is then sold off for a profit.
  • The gains made are then further invested in another venture.

This cycle of continuous expansion and investment is redesigning the way wealth is created. 

It also is a pattern card of successful financial endeavors that others in the high-net-worth category can emulate.

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Recipe For Success

The only way for wealth to develop over the rate of inflation and create a strong economy for funds to exist in, is to invest it in the markets. 

Money can be put into the market in various ways:

  • In the form of stocks
  • In real estate investment trusts (REITs)
  • Mutual funds
  • Exchange traded funds (EFTs)

All of the investment methods above are proven to show higher profitability margins than those that are experienced a standard savings scheme or CD (certificate of deposit).

The graph below shows the growth of certificate of deposit rates up to the current date:

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As can be seen by the proceeding graph, the growth that is linked to such safe investment strategies as the ones in the bullet point, show relative slow rates of profitability. 

Not an ideal increase if the desire is to release profits for reinvestment elsewhere.

What active entrepreneurs are doing is creating the wealth escalation themselves by investing in formative companies. 

This is favored over the investment strategy of relying on the markets to create the inflated return for a HNWI (high-net-worth individual).

The stock market is not being wholly circumvented by doing this. 

The asset base of the entrepreneurs is just not relying on the markets alone for a profit return.

Entrepreneurs in the past were seen to propel a company with innovation and then nurture it to a level where financial gain was inevitable. 

The new serial entrepreneur now regularly launches companies, but the running of it is soon passed on to some other trusted individual event though the entrepreneur maintains ownership. 

The company can be sold off to free up the profits after development and reinvested in another enterprise.

This continual development and rise of profits are able to be duplicated continuously. 

This is the core of the increase in gains for the serial entrepreneur, rather than having to rely solely on the markets.

As can be seen from the graph below, the creation of wealth and jobs is a very vital injection to the economy in the U.S.

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Investment Techniques

Some of the techniques that are used by the successful entrepreneurs that can be taken away from this are:

  • Higher net worth is achievable, for investors other than entrepreneurs, by expanding the role assigned financial advisors. Guidance involving decisions for money management is crucial when making the move to increase one’s asset base.  Whenever multiple sources are utilized in an advisory capacity, maximum optimization of wealth can follow.
  • A shrewd reflection on the availability of liquid funds is necessary. In order to confidently expand investment plans, the key to profitability is to never borrow funds that have a high margin of interest rates.  This erodes profits.
  • It is a good strategy to have a date-of-exit in mind before the initial investment is made. Every portfolio must show activity or else it is in danger of atrophying.

The benefits of new business ventures, even though a large proportion can implode, outweigh the drawbacks.

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