.svg)
How to start investing as an entrepreneur
One of the biggest misconceptions about working full-time is What entrepreneur is that they do not have access to the same pension and investment programs as their paid colleagues. If you're part of this growing workforce, it's important to understand that you have access to the same benefits and that you have even more options to adapt your freelance life to your needs and lifestyle.
Before looking at some of the investment options in more depth, let's first get to the bottom of how to manage your funds in your bank accounts.
Separate personal and business funds
The first thing you need to do as a freelancer is to open a checking account dedicated to your freelance activity.
You can use any bank to do this, as well as accounts specific to freelancers like:
Once you've done that, you'll be able to process any funds associated with your business through this account. Ideally, the business account should be associated with a checking account, a savings account, and a credit card.q
By separating your funds, you can set aside savings dedicated to the business in case of a downturn in activities, and prepare your taxes each year with much greater ease. This separation allows you to better take advantage of business tax deductions, while taking care of the forms associated with running your own business.
Then, you need to build up your emergency fund. While conventional studies indicate that you need to have three months of savings to meet unexpected expenses, we recommend that you extend this period from six to twelve months, in order to be able to sleep as a freelancer and entrepreneur.
Pro tip: keep your emergency fund in a well-performing savings account at an online bank. This will allow you to grow your money much more efficiently than in a regular bank. In addition, these online banks do not charge fees and do not require a minimum once the account is opened.
Should you keep an emergency fund in the same bank where you work?
You can do that if you want to! But it's not a requirement. With free online transfers available at these banks, you can move your money with ease.
Pro Tip: Another very interesting alternative for transfers where you are transferring money between several currencies (EUR <--> CAD, EUR <--> $US, etc.) is The Wise application offeror exceptional exchange rates and fees
Now that we've got that straight, it's time to take a closer look at your investment options.
Automate savings and investments
Nowadays, the entrepreneurs can still automate the deposits of money placed in their savings and investments. Apps like Betterment and Acorns will automatically move a certain percentage of the funds into respective accounts.
If you have a very lucrative month, you can also transfer the funds manually, in addition to automatic deposits.
Maximize your investments as early as possible
Yes, the entrepreneurs can contribute to your own pension.
It is not inaccessible to you because you are a freelancer, in fact, it is good to save at least €500/month for your retirement. As with all investment tactics, time is your most valuable asset, which is why we recommend that you contribute to your retirement as soon as possible by investing multiple assets to limit risk.
You can also put money into a health savings account to save on taxes while increasing your retirement fund. If you choose to use all of these options, it's certain that your funds will grow at a much faster rate than businesses.
There is always the stock market and cryptocurrencies
The stock market is not only accessible to those who work in a traditional way. Entrepreneurs can create their own account on an application like eToro and buy shares by creating a diversified portfolio that needs to be managed and monitored over time.
And, as cryptocurrencies are becoming more and more popular in today's world, you can create an account at Pionex, Coinbase or Binance and buy/store your cryptocurrencies there, or through your own cryptocurrency wallet where you can manage them.
As with all investment advice, portfolio diversity is your best protection against market changes, fluctuations, and falls.
PRO tip: Don't listen to institutions, friends, colleagues, or people who have absolutely no idea about cryptocurrencies allowing themselves to denigrate them. Many cryptocurrencies are nowadays used by large companies, institutions or even countries!
Conclusion
As much What entrepreneur, don't miss out on the financial safety net of investments, tax deductions, and pension contributions.
You are entitled to the same benefits as regular employees, except that in your case, you can put more money into these accounts as someone who can benefit from tax breaks and a higher overall income. Explore your investment options thoughtfully and share them here.
