Is investing in the financial market the same as starting a business?

[Ronin De NiroParticipant 200]

I would really like to have some practical advices from experienced people on starting a succesful business or sucessfuly investing in stocks (no daytrade). I have multiple ideas to start new business, and most models are related to development, but there are others as well. The one single thing that would certainly hinder my progress is my aversion to dealing with people, especially in a leadership position. I don’t like at all to tell people what to do, keep monitoring and pressuring when necessary.

Enter plan B: financial market (stocks or other assets). I see similar things to starting a business: it takes time to be profitable (and possible losses), its risky, and requires a lot of research and study on the subject I intend to invest. All these are something I’m ready to comply, and actually enjoy the last one. Since I have experience with creating software for statistics data, I see that it could end up becoming a good combination.

Thoughts?

[BadgerParticipant 2277]

I would suggest the stock route. I had to start late at investing because of the circumstances of my life. If done with discipline, stock investing will take less time and effort than trying to establish and run a business.

You might check out the Investment Quality Trends website. They will put you in quality stocks at the time when their price is low, thereby preventing the error of buying high.

You are right in avoiding day trading or options or any of those other high risk and time consuming methods.

[uchibenkeiParticipant 7965]

I might be splitting hairs, but buying stocks should be the same as buying into a business. Same thorough research should be applied. Not quite the same as starting a business yourself. Read “The Intelligent Investor”. It’s the bible of investing according to Warren Buffett and I agree.

I bathe in the tears of single moms.

[BadgerParticipant 2277]

uchibenkei wrote:

buying stocks should be the same as buying into a business. Same thorough research should be applied

Yes! That is advice I read decades ago and it has paid off. If you were to start a business selling hammers, say, would you purchase hammers for $2 each and sell them for $1 each?

Another strategy one can use is to consistently put money in a Vanguard index fund like the S&P 500. Over a long time, the fund will grow if one does not take money out of it. People are advised to use 401(k) and IRAs, but understand that you do not CONTROL that account and you must follow someone else’s rules on withdrawals, etc. Moreover, on some of them, there are mandatory withdrawals when you hit a certain age, and you might not need the money or want to make the withdrawal. If you don’t make the withdrawal, you are hit with a penalty. Better to invest outside those plans where you CONTROL YOUR money.

[Anonymous 42]

After all the “legal” insider trading gets done between Wallstreet, Congress, the FED, and all the rest, there’s crony capitalism gobbling up every morsel, even the crumbs.

For the rest of us fools living in this filthy corrupted mess; a trick here, a law there, we’re tied to a barrel playing hey pump&dump, swallow the load and clean up the f~~~ing mess.

A dollar saved in self reliance is one less dollar for them to squander and burn. It’s a dollar made up out of thin air that they cant tax because they can’t prove that it exits.

[John Woods 13Participant 2855]

Anonymous wrote:

A dollar saved in self reliance is one less dollar for them to squander and burn. It’s a dollar made up out of thin air that they cant tax because they can’t prove that it exits.

This made a big difference to me. I cut down more than half of my ‘discretionary’ spending by learning to do things myself. It was a win/win in my case as I like working with my hands as a hobby. So I got to do what I like and make a s~~~ load of (nontaxable)money in the process. Any and every product or service that you produce for yourself is something that you don’t have to buy, and therefore work for and pay taxes for.

More to the point of this thread, financial market research and portfolio management is a very expensive profession. People are being paid billions to do it. If you can do it for yourself, all those commissions go in your own pocket. If you have the money to invest in stock, do it, since almost any new venture/company is doomed to drown in a pile of paperwork, red tape, permits, bureaucracy and taxes.

The answer is NO. “I could but I won’t”. Memini murum!

[narwhalParticipant]

There are sites out that let you practice trading with real stocks and fake money. I’d recommending doing this for a while to make sure your strategies work and you want to invest the time and effort to do it for real.

I can’t comment on owning a business too much as I’ve never really looked into it. If I do though, I wouldn’t sell a physical product. People are trained to trust and buy from the big guys. Services are a better way to go I think. However, since you said you don’t like dealing with people, doesn’t sound like a good fit for you.

As an aside, I really admire the guys went straight from HS into a trade or service industry, and worked there way up from the bottom to own there own business. Sometimes I think I’d rather support my kids going this route instead of towards college and the corporate life.

Ok. Then do it.

[Ronin De NiroParticipant 200]

That is advice I read decades ago and it has paid off.

Can you give more details on your story?

[BadgerParticipant 2277]

Ronin De Niro wrote:

Can you give more details on your story?

Because of my need to dig myself out of poverty and desire to get an education so as to not have to work in a job that was not to my liking, it basically took me until after age 45 to finally pay off all my bills and get a job that paid a decent, but not high, salary. Nevertheless, along with my education, was studying whether to start a business, but decided that investing in companies that already were operating was more efficient. I realized from studying that if you were going to buy a business to run yourself, you would look at the balance sheet to see if they were profitable over a long period of time. As a stockholder, you own part of a business. You want one that has assets that will appreciate or that make money over time.

You can spread that risk by putting money in stock index funds, or you can purchase high quality stocks that usually pay dividends as recommended by Investment Quality Trends.

Running your own business often takes a lot of time and sometimes money and stress. The stockholder lets the others handle that.

[Ronin De NiroParticipant 200]

Thanks for your reply. Indeed I’m giving closer attention to indexes strategies. May I ask how old are you, and if you could pay all your bills today just by using your dividends? Also, I understand that your first buy was around 45?

[hollowtipsParticipant 681]

The way I see it you have more control starting your own business than investing in the market. The market is a shortcut but then you have greater risks. You can start a business for 0$ and while it make take longer to accumulate wealth and profit it becomes sustainable. Theirs a risk either way but the rewards worth it if you do the homework and hard work.

[BeerParticipant 11832]

Badger wrote:

You can spread that risk by putting money in stock index funds, or you can purchase high quality stocks that usually pay dividends

Pretty much sums it up right here. I like to go for individual stocks…I wait for a sector to get beat down and try to buy some quality companies that just got dragged down with their sector. While I wait for them to recover I collect dividends. I enjoy reading the news and following the market though…if you don’t index fund investing is what you wan to do. Just invest in index funds at regular intervals and as long as the market trends up over time you win.

In either case I think the key is not to panic sell if you lose a little money short term…in fact, it may just be an opportunity to buy more shares at a discount. Also…reinvest your dividends! Its a great way to accumulate more shares over time.

Badger wrote:

People are advised to use 401(k) and IRAs, but understand that you do not CONTROL that account and you must follow someone else’s rules on withdrawals, etc. Moreover, on some of them, there are mandatory withdrawals when you hit a certain age, and you might not need the money or want to make the withdrawal. If you don’t make the withdrawal, you are hit with a penalty.

My 401k is pretty limited…its got like a dozen funds to pick from, and most of them are mysterious managed funds that aren’t even tracked with a ticker symbol so I try to avoid them. I pretty much just load up on company stock…but if the S&P tanks and my company stock is holding steady, I’ll move money into the S&P index fund and ride that back up, or if the company stock seems like it got a bit high I’ll move money into the money market fund and wait for the company stock to go back down. That strategy has worked well for me so far.

My least favorite thing with the 401k though is when I want to move from one fund to another…it seems like no matter what time of the day I put my request in to move funds they trade it at the lowest possible value for that day. I’m pretty sure since its all computerized the request goes through pretty much instantly, then they skim the difference at the end of the day. It kind of sucks compared to my brokerage account where I can input the exact buy/sell value I want, but unless I want to give up my employer match and tax free compounding there is no way around it.

As far as the withdrawal rules though…the government dictates them, and they really aren’t that bad. You have to start taking money out at 70.5, and I think a little later if you haven’t retired yet…but if you have a significant chunk of money in such accounts wouldn’t you be enjoying it before your 70s anyhow? Would you really want to leave it there until your 70s, then when you have to take a large amount out each year and add it to your SS and any other pension/dividend/rental income you have, you just end up putting yourself in a high tax bracket. Maybe its just me but I’m more concerned about how early I can get money out penalty free than I am about having to take out money in my 70s. Its not like you have to spend the money…you can always just turn around and invest it in a post tax account.

Bonus for anyone shooting to retire early. Google 72t…its a government rule that allows you to withdraw money from retirement accounts early with no penalty, but you have to commit to taking out a certain amount each year from the year you start until you reach the age you could normally withdraw from retirement accounts penalty free. Nice way to set up a sort of early retirement pension for yourself if you do well in your retirement accounts and want to pull the plug on work early, but don’t want to get socked with the early withdrawal penalty.

Badger wrote:

Better to invest outside those plans where you CONTROL YOUR money.

Even if your company 401k plan sucks, you should at least invest enough to take advantage of whatever match they offer. You can always roll it into an IRA down the road and have more options.

[ResidentEvil7Participant 9544]

Here’s the thing I learned from my dad about investing in stock and that is you have to have a broker, and he’s going to make money whether your stock makes you money or not. He said there’s good investments and there are ones that do nothing or worse for you. It maybe just me, but I don’t feel confident in the current market, because everywhere I look there’s GOING OUT OF BUSINESS signs.

https://themanszone.webs.com/

[BeerParticipant 11832]

ResidentEvil7 wrote:

Here’s the thing I learned from my dad about investing in stock and that is you have to have a broker, and he’s going to make money whether your stock makes you money or not.

If you set up an online brokerage account you don’t have to deal with a traditional broker. They just charge a flat rate per trade which is usually around 8 bucks depending which company you use. Win or lose your cost per trade will stay the same.

hollowtips wrote:

The way I see it you have more control starting your own business than investing in the market. The market is a shortcut but then you have greater risks. You can start a business for 0$ and while it make take longer to accumulate wealth and profit it becomes sustainable. Theirs a risk either way but the rewards worth it if you do the homework and hard work.

If you have a decent job though, and you quit it to focus on starting a business…its really a net loss for a while compared to had you just stayed at your job…plus there is no guarantee the business will succeed no matter how hard you work at it. This is why a lot of people just punch a clock for someone else, and invest in businesses other people are running. In the end some of us have more capital than time, and others more time than capital, and that weighs heavily into whether it makes more sense for you to be a working owner or an investor.

[BadgerParticipant 2277]

Ronin De Niro wrote:

May I ask how old are you, and if you could pay all your bills today just by using your dividends? Also, I understand that your first buy was around 45?

I am past age 73. I did invest before age 45, but often had to cash in the money for education. It was ONLY after age 45 that I could let the money sit undisturbed. Since I started at a later age, I had to use a different strategy than someone who was younger. The younger person can use time more effectively.

My strategy was to purchase exploration companies in minerals and precious metals IF AND ONLY IF they had a world-class deposit or they were backed by other major companies in the field, like Barrick Gold, Goldcorp, BHP Billington, etc. OR a billionaire like Ernesto Echavarria, Ross Beaty, Keith Neumeyer, etc. It takes discipline to sit and wait, often for years, for some of these companies to pay off. However, using this strategy, the risk was lower, but never guaranteed. You can lose everything or almost everything. If that bothers you, you should never use this strategy.

No, I could not live on the dividends of these companies, BUT if I were to sell all of them and put the proceeds in an index fund now with a dividend of 2 per cent or better, along with my pension and Social Security, I would have more than enough to live beyond the normal middle class level. After so many years of struggle to get out of poverty and get a good education I just wanted enough money not to be poor in old age.

hollowtips wrote:

The way I see it you have more control starting your own business than investing in the market. The market is a shortcut but then you have greater risks. You can start a business for 0$ and while it make take longer to accumulate wealth and profit it becomes sustainable. Theirs a risk either way but the rewards worth it if you do the homework and hard work.

This is true for the people who have the ability and time to do it. It was not an option for me, but if it is for others, they are wise to follow their own path. There is no one formula or way that fits everyone.

Beer wrote:

Pretty much sums it up right here. I like to go for individual stocks…I wait for a sector to get beat down and try to buy some quality companies that just got dragged down with their sector. While I wait for them to recover I collect dividends.

This is also a excellent strategy that is based on sound logic. The late Howard Ruff once said he met an elderly man who followed this same strategy and that man had the highest gains in stocks that he had every seen. This is somewhat like what Investment Quality Trends is doing on a lesser level. They “time” these quality stocks somewhat in the way that Burton Pugh wrote about in the 1930s, using a triple zone method. IQ Trends sticks to quality stocks that almost always pay a dividend. I have no ties to them.

The point is, whatever strategy you choose should fit your age, situation, temperament, life style, and risk tolerance. There is no one size that fits all, but some of them are less risky and time consuming, like index funds and the IQ Trends strategy.

[Mr_OptionsParticipant 298]

I’ve personally been trading options for the past 18 months. It’s part of my FU money plan to FIRE (Financial Independence and Early Retirement). Within the next 5 years I should be at my goal. Then I can quit my 9-5 JOB (Just Over Broke). Everything in life worth obtaining, starts with a well thought out plan. Money is just a tool, that we can use to do the things we want with our lives.

A man without a woman is like a fish without a hook.

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