Author Topic: Business ownership  (Read 303 times)

EllieCan

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Business ownership
« on: March 24, 2017, 03:42:43 PM »
I want to save enough for retirement. Don't have a pension plan. A lot of our net worth is tied up in our business. Should I count the value of the business as zero when calculating how much I need to retire?

KeithTax

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Re: Business ownership
« Reply #1 on: March 24, 2017, 07:58:12 PM »
The business has value, maybe a lot of value. Be honest in assessing the value. How much would it really sell for?

Since your business is an asset it can be sold and the money invested in index funds for an income stream or you can hire people to run the company with modest involvement by you for an income stream. When I talk about reaching retirement net worth at 32 my business was worth about $300K at the time; the remainder was liquid.  Usually I tell people they need 25 times spending liquid. I include the equity in the personal residence as part of the net worth total, but unless you intend on selling it is best to exclude the non-productive net worth (net worth not generating a revenue stream).

Your business could be the bulk of your net worth. Remember, stocks are really fractional ownership of businesses. Businesses should throw off a revenue stream to owners. Investment properties too.