You’ve poured everything into building your business. Every waking hour, every pound of capital, every ounce of energy—it’s all gone into making your venture succeed. Now, you’re finally generating healthy profits and earning a decent salary. There’s surplus cash accumulating in your personal account for the first time in years.
Here’s the problem: whilst you’re brilliant at building businesses, you’ve got zero experience building personal wealth outside your company. Your entire financial life is tied to one asset—your business—which any financial adviser would tell you is spectacularly risky. You know you should diversify, build an investment portfolio, and create financial security beyond your company. But where do you even start when you’re already working 60-hour weeks?
The good news? Learning how to build your investment portfolio doesn’t require becoming a finance expert, spending hours daily monitoring markets, or making it your second full-time job. Here’s how founders can create sensible investment strategies without the stress, complexity, or time drain you absolutely don’t need.
Why Founders’ Financial Situations Are Unique
Before diving into how to build your investment portfolio, acknowledge that your financial situation differs significantly from that of typical investors. You’re not a salaried employee with predictable income and an employer pension. Your wealth is probably concentrated in one illiquid asset—your business. Your income might fluctuate dramatically year to year. You might have significant capital tied up in company equity that you can’t easily access.
This creates specific challenges and opportunities. You need diversification more than most people because a significant portion of your wealth is concentrated in your business. But you also probably have a higher risk tolerance—if you were risk-averse, you wouldn’t be a founder. You need investment approaches that work despite irregular cash flow and don’t require constant attention you can’t spare.
Understanding these unique circumstances prevents blindly following generic investment advice designed for employees with steady salaries and company pensions. Your situation requires tailored approaches.
Start With the Unglamorous Foundations
Before getting excited about investment portfolios, sort out boring but essential foundations. Build an emergency fund covering 6-12 months of personal expenses. As a founder, your income is less secure than that of employees, making larger emergency reserves a sensible option. This money should be instantly accessible, not invested in anything that could lose value when you need it.
Clear any expensive personal debt—credit cards, loans, anything charging more than you could reasonably expect from investments. Paying off 18% APR credit card debt delivers guaranteed 18% “returns” that no investment can match reliably.
Maximise pension contributions if you’re not already doing so. The tax relief makes pensions extraordinarily efficient wealth-building vehicles. Yes, money is locked away until retirement, but that forces long-term thinking, preventing impulsive decisions. Many founders neglect pensions whilst building businesses, creating huge wealth in companies, but nothing for retirement.
Get proper insurance—life insurance if you have dependents, critical illness cover, and income protection. These aren’t investments, but they protect the investments you’ll build. Founders often skip this, assuming their business provides security. It doesn’t—protect yourself properly.
Only once these foundations are solid should you focus on building your investment portfolio for growth beyond essential protection.
The Case for Boring Index Funds
Here’s something most founders resist initially: the best investment strategy is probably remarkably boring. Specifically, low-cost index funds that simply track market performance rather than trying to beat it.
This feels wrong. You’re a founder—you beat the odds, you spot opportunities others miss, you create value through insight and hustle. Can you pick winning investments more effectively than passively accepting average market returns?
Statistically, you probably can’t. Neither can most professional fund managers, despite doing this full-time with extensive resources at their disposal. Over long periods, the vast majority of actively managed funds underperform simple index trackers, primarily because fees erode returns, even when stock-picking is relatively effective.
Index funds offer diversification across hundreds or thousands of companies instantly, minimal fees (often 0.1-0.3% annually versus 1-2%+ for active funds), no time required researching individual investments, and returns that match overall market performance, which historically has been excellent over decades.
For time-poor founders who need “set and forget” solutions that don’t require constant attention, index funds are perfect. You’re not trying to beat the market—you’re capturing market returns efficiently whilst focusing energy on your actual expertise: building your business.
Asset Allocation: The Only Decision That Really Matters
The most important investment decision isn’t which stocks to buy—it’s how you split your portfolio between different asset classes. This “asset allocation” determines most of your returns and risk.
Basic asset classes include equities (stocks)—higher long-term returns but volatile short-term; bonds (government or corporate debt)—lower returns but more stable; property—can provide income and growth but is less liquid; and cash—safe but loses value to inflation.
Your allocation should reflect your time horizon, risk tolerance, and financial goals. Younger founders with decades until retirement can tolerate more equities because temporary crashes don’t matter in the long term. Founders nearing retirement need stability—significant equity exposure becomes riskier as the time to recover from crashes shortens.
A common starting point: 60% equities, 30% bonds, 10% cash/alternatives. Adjust based on circumstances. More risk tolerance? Higher equity allocation. Shorter timeline? More bonds. Need some funds within five years? Keep that portion in cash/bonds regardless of long-term allocation.
Building an effective investment portfolio is primarily about getting asset allocation right, rather than picking individual investments. Get allocation correct using low-cost index funds, and you’ve done 90% of the work.
Automating Everything
Founders need financial systems that work without constant intervention. Automation is essential. Set up monthly direct debits transferring set amounts from your current account to investment accounts automatically. Treat investing like any other non-negotiable expense.
Use pound-cost averaging by investing fixed amounts monthly regardless of market conditions. This removes emotion from timing decisions and naturally buys more units when prices are low, fewer when prices are high. You’re not trying to time the market—you’re systematically building wealth.
Enable automatic rebalancing if your platform offers it. Over time, better-performing assets will dominate your portfolio, skewing from the intended allocation. Automatic rebalancing sells some winners and buys more underperformers, maintaining your desired allocation without requiring manual intervention.
The less thinking required, the more likely you are to stick with the strategy in the long term. Consistent, automated investing consistently outperforms sporadic, enthusiastic efforts.
Tax Wrappers: Free Money from HMRC
Use tax-advantaged accounts aggressively. ISAs allow £20,000 annual contributions (2024/25) with completely tax-free growth and withdrawals. That’s extraordinary—maximise ISA allowances before investing in taxable accounts.
Pensions offer tax relief on contributions and provide tax-free growth, although the money is locked until retirement. For higher-rate taxpayers, pension contributions effectively receive 40% upfront returns through tax relief. That’s difficult to beat.
If married, use both partners’ allowances. £40,000 annually in ISAs between two people compounds significantly over the course of decades. Married couples can also share assets to minimise capital gains tax and maximise personal allowances.
Understanding how to build a tax-efficient investment portfolio dramatically improves long-term outcomes. Don’t gift HMRC money unnecessarily through poor tax planning.
When to Consider Alternatives
Once you’ve maximised ISAs and pensions, established solid index fund foundations, and genuinely have surplus capital, consider alternatives. Property, direct equity investments, venture capital (investing in other founders’ businesses), and even alternative assets like collectables might make sense.
But be honest about time, expertise, and whether you’re truly adding value or just seeking excitement. Most founders’ time delivers better returns focused on their businesses than managing complex alternative investments.
If you do explore alternatives, limit them to small portfolio percentages. Keep the core boring, diversified, and automated. Alternatives should be additions, not replacements, for solid foundations.
The Biggest Mistake Founders Make
The single biggest mistake? Doing nothing because it feels overwhelming. Your business succeeds because you take action despite imperfect information. Apply that same mindset to personal investing.
You don’t need perfect knowledge. You need a sufficient understanding to make reasonable decisions, and then consistent execution over the decades. Starting imperfectly beats perfect planning that never begins.
Don’t let complexity paralysis prevent building financial security outside your business. Your future self—especially if your business exists, fails, or simply becomes less consuming—will be grateful you started, even imperfectly.
Your business is your primary wealth-building vehicle—but diversification protects you if things go wrong and provides options if they go right. Build your investment portfolio now, even modestly, using simple strategies that work without consuming time you don’t have. Future you will be immensely grateful you started today.
