What if I reinvested profits back into the business?
Profit that stays in the business buys something you know well and cannot easily sell. The same profit taken out buys something you know less well and can sell on any day. The decision is not only which return is higher — it is how much of your future you want resting on one company.
What shapes the choice
- The amount reinvested and how often — one lump, or profit held back month after month.
- The return you assume inside the business against the one you assume outside it.
- The personal reserve left if profits stay in the company rather than reaching you.
- How, and how quickly, money could come back out of the business if you needed it.
- The horizon, any planned exit, and how much of your net worth one business would hold.
Reinvest, or take it out
Hold the profit amount and the months fixed and change only its destination: back into the business in one copy, into a personal portfolio in the other, same horizon in both. What the comparison shows is the gap between two assumed returns — useful, as long as you remember that both numbers came from you.
Then lower the business return and raise the personal one, and afterwards do the reverse. The order usually flips somewhere, and the point at which it flips tells you more than either single run. If a small change of assumption swaps the answer, the two paths were closer together than they looked.
Questions worth testing
- How far apart do the two returns have to be before reinvesting wins clearly?
- What personal reserve is left in the months profit stays inside the company?
- What does the plan look like if the reinvestment returns nothing at all?
- How much of your net worth would sit in one business by the end of the plan?
How to read the result
Both returns are assumptions, and the business one is usually the less knowable of the two. Worthifi does not value the company, forecast its profit, or measure the concentration risk of holding a single large asset — it shows only what you entered. It does not model the tax difference between profit distributed and profit retained either. This is a planning illustration, not investment, business or tax advice.
How it works in the app
Log the reinvestment as a capital expense against the business, then add a cashflow change for when the higher profit begins. Compare cashing out now against the higher cashflow it buys later.
- Open the business in Assets, then tap “Capital expense”.
- Enter the amount, and optionally the extra monthly profit it will add once it pays off.
- Add a “Change cashflow” event for when the higher profit begins, and compare it against not reinvesting.
Model this yourself