The following is based on my experience advising institutional investors—hope it’s helpful! But don’t make decisions based solely on this. Better to get properly informed and tailored advice.
You’re asking how much risk to take in your runway portfolio. Currently you’re taking no risk.
It makes sense to take risk if your investment horizon is long enough. Retirement savings are very long-term, so they can afford to be invested in risky, growth-seeking assets like shares.
To give my intuition on the numbers, if your runway is intended to be mostly spent in the next 6 months, a bank account is a good option. If you have a more than a year or two to invest, it would be typical to start taking some risk in the portfolio, e.g. with a share allocation. Not with 100% of your portfolio, but maybe 20% or 30%. If investing for longer than 10 years, you could put 70% or more in risky growth-seeking assets.
The above assumes your existing retirement savings are off limits if you run out of runway cash. There is also an implicit assumption about your risk aversion. On that matter, your risk aversion should be applied to the aggregate of all your assets, including your startup itself which is a significant source of uncertainty.
The following is based on my experience advising institutional investors—hope it’s helpful! But don’t make decisions based solely on this. Better to get properly informed and tailored advice.
You’re asking how much risk to take in your runway portfolio. Currently you’re taking no risk.
It makes sense to take risk if your investment horizon is long enough. Retirement savings are very long-term, so they can afford to be invested in risky, growth-seeking assets like shares.
To give my intuition on the numbers, if your runway is intended to be mostly spent in the next 6 months, a bank account is a good option. If you have a more than a year or two to invest, it would be typical to start taking some risk in the portfolio, e.g. with a share allocation. Not with 100% of your portfolio, but maybe 20% or 30%. If investing for longer than 10 years, you could put 70% or more in risky growth-seeking assets.
The above assumes your existing retirement savings are off limits if you run out of runway cash. There is also an implicit assumption about your risk aversion. On that matter, your risk aversion should be applied to the aggregate of all your assets, including your startup itself which is a significant source of uncertainty.