Investing In Your Own Business
By Myles Johnstone
Most financial advice today pertains to investing in the stock market. This may seem strange since most millionaires in America own their own businesses; they got rich by investing most of their money in their businesses, not in the stock market. There can be no denying that one of the key paths to truly high rates of return is starting a successful business and reinvesting most of your profits back, in that business.
The major reason that we will not devote much space to business ownership is that we know that most people will not start and run their own business, but will spend their careers working in businesses owned primarily by others. While you will never accumulate enough to rival the wealth of Bill Gates working for a salary, we think it is important for ordinary workers to know that they can become millionaires without being entrepreneurs. And for those who do not have a business to invest in, the stock market offers an attractive alternative.
Becoming a successful business owner requires inspiration, entrepreneurial spirit, an intuitive sense of what appeals to customers, and, maybe most important, a willingness to put in long hours of hard work. If you have those attributes and want to start your own business, our advice is do it.
There are a few things about running your own business that tie into our message of taking prudent risks to those who want to get rich:
1. The potential for high profit from business ownership is partially explained as a return to the considerable risk involved. There is a high probability that you will incur heavy losses from starting and running your own business. Starting and running a business is much riskier than investing some of your salary in an index mutual fund.
2. One reason researchers have found that most millionaires are business owners is that they are reporting on the owners who actually "made it" in business. If you start a business with the prospect of a high rate of return an (you actually make it in the business, then it stands to reason that you will likely end up with a lot of wealth. However, the researchers often ignore all those would-be successful business owners who tried but failed, and many people who start their own businesses fall into that category.
3. Not all the potential return from business ownership is explained by risk. Much of the return is a payoff for the long hours business owners devote to their businesses. Much of the calculated return on the investment is really income for working the extra long hours. The income is similar to that earned by someone who takes a second job, and instead of starting a business, you might consider taking a second job and investing the added income.
About the Author
Myles Johnstone writes exclusively for finance related sites such as Refinancing Finance Info.com, Vehicle Finance Info.com and finance Solutions info.com
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