Comments on: Investing vs. Starting a Business

by: todd

Fri, 20 Jul 2007 20:52:17 +0000

You can build a business and still have a social life if you learn how to manage your time. BUilding a business is harder than investing but the reward is better. Currently i am a stock investor but i hope to start a business sometime in the near future

by: Michael Bowerman

Tue, 11 Jul 2006 14:51:27 +0000

Everyone assumes you will earn a 10% return by investing passively in a mutual fund. That seems unlikely. If someone is smart and hardworking than I think that he/she can start a business and do very well. And yes, it can also be very stressfull. Money doesn’t grow on trees though and mutual funds nreturning 10% every year forever does not seem likel to me, regardless of what has happened over the last 70 years.

by: Tim

Thu, 02 Feb 2006 16:15:55 +0000

Assumptions for investment option: 1) net 10% return , 2) an income that covers the living expense w/ any left over dedicated to achive the investment return, 3) same starting “principal”

Asumptions for business option: 1) net 20% return, 2) all expenses covered, 3) same starting “principal”

Given thie assumptions, the investment option is a good choice if you are not the type that starts business. But if you like to start business and deal with what it entails, then 20% is definitely better than 10%.

My return on 401K is about 20+% (pre-tax) with maximum contribution and company contribution. But I am leaving a 100K IT job to start a business in 1 month, leaving behind a good 401k matching benefit and any little security that a job brings.

Of course, I get in return is to do things that I enjoy and hope to bring in more than > $200K/year in net profit in 2 years. I know all about the statistics and risks with starting a business, but I have done analysis on risks, success factors, opportunity costs, etc. And I have decided to go for it:-)

by: Chris

Tue, 31 Jan 2006 00:48:39 +0000

That’s very true, Big Mike, but think of it this way: let’s say you wanted to live off of your extra 10%. In order to maintain a salary with the earning power of $70,000 today, you’d only be able to live off of 7 of that 10%, so that you don’t succumb to the effects of inflation over time.

In order, then, to live off of 7% of your income you’d have to be playing with over $1,000,000 in non-retirement account funds. If you can do that, more power to you, cause that’s in my plans for world domination as well… however, I am not yet there.

by: Mike

Mon, 30 Jan 2006 22:15:17 +0000

I would suggest looking at the difference in the amount of money you will have in 10 years at 10% vs. 10 years at 20% before you make the decision. To get the 10yr-10% figure, multiply your investment by 2.59. To get the 10yr-20% figure, multiply your investement by 6.19. So, on a $100K investment, you would end up with $225,900 vs. $619,000 in just 10 years. I can buy a lot of social life for the $393,100 difference.

by: Big Mike

Mon, 30 Jan 2006 14:03:24 +0000

This was something I was thinking about myself recently.

If you can really increase your return from 10% to 20% by working harder at it, and you have enough money to invest, then it MAKES SENSE to quit your job and make investing your full time job.

by: Canadian Capitalist » Carnival of Investing # 7

Mon, 30 Jan 2006 03:46:10 +0000

[…] Investing vs. Starting a Business: Investor Geeks briefly shares his thoughts on the choice between investing and starting a business. […]

by: Anil Passi

Sun, 29 Jan 2006 11:32:07 +0000

Investing in a company’s stocks is equivalent to part-owning that company itself. I would prefer investing to starting up business for the following reasons:-
1. Flexibility of chaning the investments as and when the sectors become bullish or bearish. For example being a business owner of a real estate construction company, I can not simply pause real-estate business when outlook for property becomes bearish. However, as an investor, I can simply switch my investments from property stocks to say gold/natural resources based stocks.

2. So often do you see that family life of influencal businessmen ruined by tough travel schedules and long work hours. Being in investment(mid/long term) one can enjoy going out on holidays with family.

3. Avoid the politics jungle of managing your employees. As an investor, the ongoing politics amongst the employees/directors of the underlying does not effect me. Being a business owner, these can cause me sleepless nights.

Surely, runnning a business has its own merits like feeling of satisfaction of growing the business. But my satisfaction comes from seeing my portfolio grow.

Thanks,
Anil Passi
www.anilpassi.com