Remember Investing is About Profiting – Tip – Invest Not Restrict

People are always asking me which stock to buy, or which sector is hot right now for them to jump into. Questions like that usually make me laugh a little to myself, because even though investing is in part about what is “hot” (an investment must increase in value to benefit you), it is mainly value in relation to what people are paying for something now versus what they might pay for it later.

For the most part I put people on a safe path towards a desired yearly return with an acceptable risk level based on their comfort level and financial goals. However, I am constantly reminding people that investing is about profiting, so why are they limiting themselves to just one market.

Everyone knows something: a hobby, a trade, a skill, a way of life. However, not many people have the confidence to pursue this type of investment. Alternative as it might be, sometimes the best investment for people is not the stock market, but in a carefully laid out investment in themselves.

It’s no secret that one of the most profitable investments is starting a business. There’s an old saying “Those with wealth invest, those with knowledge create.” People usually find themselves on either end of the spectrum, some even in the middle. The point is, why are you not investing in one of the best vehicles for your dollar?

The sad fact is that most people either do not have the drive to motivate themselves to start a business or lack the knowledge in the field of business they wish to enter. True, starting a business can be a daunting task, capable of sucking away most of your time. Estimates range that a new business owner’s weekly workload can average around 50-70hrs, leaving little time for social events or anything else that is not properly time managed correctly. This leads to the fact that 80% of new businesses fail within their first year of operation.

If 80% of new businesses fail in their first year, then why is it a good investment? Simple, one net worth can grow tax deferred (or tax free in some cases) a multiple of times within a very short period of time. It’s like picking a stock at $1, and having it go to $20, but you’re in control of how high it can go. Most businesses fail due to poor planning, time constraints, or even a business owner trying to tackle everything on their own and not having enough time to effectively handle even one part of their business correctly. Stress, financial strain, legal matters, taxes, employees, are among other things that can bog down a business in the beginning.

With most investments, more reward means more risk, but with a business, the risk is usually limited because you control it. You decide each move, each play, and as such control the outcome of your investment return; the trade off is that you must make each decision not someone else. With a business, you are trading the ability to make more by correctly leveraging off of yourself and other people (employees), versus making a limited or lesser amount by “correctly” selecting the best company to “invest” in. Too often people have gotten burned in the market because even though they did the correct due diligence on a company and found a sound investment, the market “reacted” differently than what made fundamental sense. The end result is a loss when you should have had a win. With a business, you decide, because the health (net worth) of your business is directly related to the fundamental factors affecting it, not by the rapid selling of trust funds, or liquidating board’s members with enormous option packages to cash in.

Just remember that if done correctly, starting a new business can become a well oiled-machine. Providing a continual net worth increase and making your every dream become a reality, being only limited by our drive and imagination. The wealth that can be ascertained with a business is comparable by few other investments making it a worthwhile venture to consider.