Author Topic: Should taking on a business loan affect your assetmix?  (Read 628 times)

Lonely Artisan

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Should taking on a business loan affect your assetmix?
« on: February 03, 2018, 01:55:49 PM »
I was wondering whether this is the best place to post this, but as it deals with personal asset mix and risk exposure I figure it would be appropriate

Without going into too much detail, my professional/financial situation changed recently and I was wondering what were your thoughts on its would-be impacts on my investments asset mix.

quick overview:
I am fully invested in the market and no other streams of income beside work.
I have some equity in my house, it is about 60% paid and I took 15% of the equity and invested that in the market
I've been rather aggressive, at about 85% stock and 15% bonds so far.

Now, my partners and I recently took on a business loan to buy out some other partners in the company. In the process, we had to inject some personal capital. We gave personal guarantees with this loan. Needless to say we have strong company financials but this is still a private equity business (small-medium) with all the risks one can see being associated with it. I prefer now to divulge too much regarding the company as I think some co-workers might be browsing the forum.

Now the question is, how would you review your asset mix in regards to that latest investment/loan?

- Would you treat your capital injection as being stocks and rebalance accordingly?
- Would you move the equivalent of the guarantee (the maximum risk I am in for, which is a substantial % of my net worth) and move it to a less risky asset class?
- Would you simply not change anything? ...but on the other hand I see this investment as added risk I took on that needs to be rebalanced

What are your thoughts? How would you analyze this?