A-Tisket, A-Tasket

Now’s the time to sell your basket.

You have lived through economic booms and recessions; seen bubbles form and bubbles burst; experienced the triumphs and challenges of a changing business landscape; and marveled first-hand at the revolutionary technologies that drive the world forward. For years you have seen your diversified investment portfolio grow. Your stocks are reaching all-time highs and paying healthy dividends; your real estate properties are increasing in value and providing steady monthly income; and the income-generating businesses that you either own and operate or are an equity partner in are performing better than ever. You are ready to be living the lifestyle you always imagined, so what do you do next? Hopefully you had some return on investment in mind when you planned your investments all those years ago. Now it’s time to implement your exit strategy and reap the rewards.

Selling Real Estate
Decide when the time is right to sell your real estate. Whether you originally bought a turnkey property (one ready for occupancy from day one) or a property you rehabilitated, consider the financial state of the investment. Is debt paid off with the bank? Are interest rates favorable or unfavorable for refinancing? Have your tenants been reliable or have you had perpetual turnover? Lastly, what were the terms of your original investments, and has the increase in value satisfied your initial ROI? You should also study the market environment to ensure there will be people eager to buy your properties. Most importantly, selling your real estate will close an income stream. Your sale will be best executed if you have another investment opportunity lined up, or you have other sources of income. Keep in mind that in every sale, you are required to pay taxes on capital gains.

Selling Stocks
Knowing when to sell stocks is absolutely critical. The goal should not be to pull all your money out of the market (as the value of stocks will always go up in the long term), but rather to protect your profits and reinvest them in other opportunities. Establish a percentage of loss and apply it to your original purchase price. If a stock is below that price and continues to fall, don’t wait for the stock to come back. Cut your losses, and put your money to work in a better place. If a stock has appreciated in value, make sure it does not control too high a percentage of your portfolio. You should sell part, protect your profits, and reinvest in other opportunities.

Selling Businesses
One of the biggest vehicles for the quickest returns on investment is investing in small businesses. The sale, however, is unlike that for real estate and stocks. The best time to sell a business is when it is doing well. But before attempting to sell, you must assess the business to find its maximum value. Add back any personal expenses and non-recurring expenses to the bottom line to get a true measure of discretionary earnings. Know what makes your business valuable, and market it as such. First and foremost, buyers are eager to see strong numbers with positive cash flow. In addition, buyers don’t want to buy a job! Most buyers are looking for employees and a management team in place, and a healthy customer base. Buyers also must connect emotionally with your business. They must see themselves working in that environment in order to turn a potential deal into a reality. Hire a good business intermediary that knows the industry; knows how to attract buyers; and can get the deal done. Selling your business for maximum value will surely increase your return on investment.

Realizing your after-tax gains will allow you to live the life you have always dreamed of, but do not continue to live absentminded. A good investor always keeps an eye out for other opportunities to build wealth. Investing in various asset classes is not a one-time activity in which you simply get in and get out. It is a lifelong pursuit that will provide you with regular cash flow, keep you lucid and help you build toward a happy lifestyle for you and the generations that follow.
Realizing the Value of Your Investments
1. To start out, you will need to ask yourself a lot of questions about the current and future direction of the market — whether it be the stock, real estate or business market. Find an expert to help you and make sure the timing is right.
2. The biggest returns come from selling your business. Work extra hard to attract buyers and make sure your business is performing financially. Hiring a good business broker can make all the difference, and he or she can get you the highest price possible for the value of your company.
3. The stock market is great for collecting long-term benefits. Protect your profits when the value of your stocks increase, and reinvest your earnings in other opportunities.
4. Cutting ties with your real estate will always be a difficult decision. Ensure the timing is right and you have access to other investment opportunities or sources of income. Pass on these returns and live the life you’ve always envisioned.
5. Overall, anything with the possibility of reward comes with risk. Diversifying your investments will limit your exposure to risk. At the time of sale, try not to keep all your eggs in one basket.