Okay, to be honest, I know I am biased on this issue. Of course I believe that investing in my own business was the best choice I’ve ever made, and I know that it can be that way for a lot of other people that are willing to work hard.
On the other hand, there are good reasons to consider passive investments as well.
Understanding which one is the right choice for you might be a bit tricky, but I think I can help.
Benefits of Investing in Yourself
When you invest in starting your own business, you get to reap the rewards directly. If you take action and follow the right steps, you can do extremely well. Of course, this depends on your personality.
If you are driven, then starting your own business is the best thing you can do to secure your financial future.
According to Forbes, over 50 percent of the working population is employed at a small business. That means there is more stability in entrepreneurship than you’ve probably been told in the past.
However, the same source tells us that only 25 percent of startups will stay in business for 15 years or longer. So, you’ve got to have the right mindset and be really dedicated to succeed in the long term.
As the owner and manager of your own business, you are personally responsible for bringing in sales and keeping yourself profitable.
With passive investments, you have no way to personally ensure the success of the ventures…
…financial products, or packages to which you have given money. Investing in yourself means taking control of how your money is used. So, if you know what you’re doing, you can make sure it grows as quickly as possible.
Benefits of Passive Investment
Passive investments are profitable, but not all at once. They need time to grow with the market. CNBC describes passive investors this way:
Passive investors, also known as buy-and-hold, do not seek to profit from short-term price fluctuations or attempt to time the market. Instead, they assemble a broadly diversified portfolio of funds across and between market sectors. Then they sit tight.”
Not everyone is as motivated as I am. They have other priorities outside of work and less time to devote to learning how to run a business and following through on an action plan.
If you have a job and a family that you want to spend as much time with as possible…
…you may not be driven to start a business and put 100 percent of your effort into it.
If that’s the case, passive investments may be the better option for you, since they require no follow-up and no real strategizing beyond choosing which products to invest in.
You Can Make Both Types of Investments
If you are excited about starting your own business and making it work, you are going to have to invest most or all of your money into the venture. That’s just how it works. And once you’ve started to see profit, you’ll need to reinvest it into the business.
That doesn’t mean that you can’t expand your financial horizons in the future. Once your business is comfortably profitable, probably a few years down the line, you’ll be able to make some passive investments as well as business investments.
Entrepreneurs are naturally averse to liquidating assets and hesitant to invest outside of their own business, but it is always a good idea to diversify your investments.
Either Answer Is Correct so Long as You Invest
Whether you are dedicated to investing your money into your own business and making it grow, or keeping it simple and choosing the passive investment route, you’ll still be growing your money. And in the end, that’s what really matters.
Article curated from MOBE