investment

Most mid size and large employers sponsor employee retirement plans, even if they’re not particularly generous. This is partly out of financial self-interest, as employer-sponsored benefit plans can confer tremendous tax benefits. But it’s also good business—a straightforward way to thank employees for their service, and to attract and retain talented workers preoccupied with their families’ futures.

So, if you’re a white-collar professional working for a reasonably sized company, you probably have access to a retirement plan that allows you to invest before-tax income in the stock market. Your employer might even match your contributions, significantly boosting your saving power.

But what if you’re a white-collar professional working for yourself?

Many independents don’t realize that they too can take advantage of investor-friendly retirement plans, just like their employed counterparts. The rules are a bit different for people who work for themselves, but you don’t need to be a tax attorney or financial professional to make sense of them. Here’s what you need to know to make sense of investing for your future as a sole proprietor.

Get Familiar With Common Investing Myths

Novice investors can fall prey to a whole host of investing myths through no fault of their own. As professional investor and best-selling author Ken Fisher notes in The Little Book of Market Myths, these pervasive nuggets of misinformation can derail even the best-laid investment plans. If you’re managing your own retirement investments as an independent professional, you need to be able to recognize, anticipate and avoid common myths that can eat into your nest egg. If you’re worried that you’re not up to the task, or you simply can’t devote the time and resources to it, talk to a financial professional—but make sure they know how to avoid those myths too.

Know Your Goals and Time Horizons

Every independent professional knows how important it is to plan ahead. The best way to ensure that you’re making the proper plans for your financial future is to lay out discrete financial objectives that align with major life goals or events—building an emergency fund, ensuring your children don’t have to take on crippling debt to finance their educations, planning for your retirement. Each goal needs to have a time horizon, which will determine where and how you invest your funds. Basically, you don’t want to put all your eggs in one basket.

Stay on Top of Your Taxes

Independent professionals can’t rely on an employer to withhold state and federal taxes on their behalf. If they’re required to make estimated tax payments, they need to make sure they have enough money in the bank each quarter—no ifs, ands or buts.

The best way to stay on top of your tax obligations is to make regular deposits into an interest-bearing account earmarked as a short-term holding account for estimated tax payments. You’ll earn a small, but non-negligible return on those funds, notes Tamara E. Holmes of Bankrate. Anything helps.

Keep Your Options Open

Independent professionals don’t always stay independent. Your investment strategy needs to account for a range of potential career moves, from scaling your solo practice into a larger business, to throwing in the towel and seeking traditional employment in your field, to cutting back to part time to achieve a better work-life balance. Every inflection point affects your retirement plans in some way, and you’ll want to talk to a financial professional to determine how best to handle the implications. The best way to avoid disruption during transition periods is to maintain a diversified, flexible strategy and keep an open mind as new opportunities present themselves.

What are you doing to protect and grow the fruits of your labor as an independent professional?