Why I Gave Up on the Stock Market
I have known about the stock market for as long as I could remember. It must have been explained to me more than a hundred times, and I still don’t really get it.
I find it difficult to wrap my head around the price of a stock to see if it will rise or drop … But I never cared enough to give it the time to understand it.
If it was a choice between the two … I am not sure if I would select the share market. I have found a far more stable and easier means of earning an income. Coincidentally, I found that income through my own business.
You will be surprised to hear that I am going to discuss the mainstream way of earning money in a moment and why it may be better than the share market.
If I was going to open a bank account months ago, I would have chosen one with a secure return. What did I go for? The share market. I asked myself, “What was the point of having a reliable return?” You would have the money, but pretty much have to sit down and let it breathe.
More Control Over Who Calls the Shots
Direct ownership of an online business is a far cry from dealing with a brokerage firm when it comes to making decisions. Whether it’s a business or a personal finance vehicle like stocks, there are far more restrictions on what you can do at the latter.
Say you start a business that’s wildly successful. Sure, you’ve put in the work to get there, but there’s no denying that the stockholders have a claim to your company’s success as well. If you’re the majority shareholder, you may have a say in the matter, but it’s ultimately in the hands of your stockholders. ¦You may even lose control to outside investors later on. ¦
Accounting for all these stakeholders in the success of a business can be extremely tricky, and with it often comes an increase in the red tape and bureaucracy that comes with it.
It’s naive to think that a company can’t make poor decisions. And that’s when your returns take a hit. The beauty of an online business is that the wheeling and dealing is left in your court.
Less Risk and More Leverage
It is probably safe to say that if you are reading this article, you probably appreciate a good risk-reward scenario. Many people are attracted to investing in the stock market for this very reason. You can make a lot of money, but you can also lose a lot.
With a business that you start, you can multiply that same risk-reward scenario by 10, but you can do it with less risk, less loss, and more leverage.
Since you already have a business, you don’t just depend on the stock market to make returns for you. You can still outsource to contractors, but if things get bad, you will never lose as much as you would from, say, an investment in stocks.
So, it can be argued that since you have less risk for the same potential reward, you have more leverage. This is why it is important to keep a high level of leverage in your business.
More Leverage Means More Growth Potential
The more you have to work with, the more you can grow your profits. This means you will be able to reinvest your initial investment to add more value to your business and make it grow faster.
This also means that if you work hard and make the right decisions, you can grow your business to the point where you no longer have to deal with it on a daily or hourly basis.
More Flexibility and Broader Options
Of course, there are a few things you need to consider before you start your own business. This is a long-term investment, so you need to be willing to make sacrifices in the short term. Like any other business, you have to factor in the education, training, and advertising so you can have a good chance of succeeding. With this in mind, I don’t mind trading my time for money. I’m willing to work a few extra hours if that’s what it takes. It’s not as if I have to trade my time for anybody else to decide if I’m worth anything or not.
The best part of having your own online business is that it’s portable. You can work whenever you want and wherever you want. If you need a vacation, you just take it. If want to go on a date or spend time with you family, you can do so without having to worry about whether you’ll have any interruptions.
Here is a story from one of my readers:
Larger Tax Benefits
Are you aware that when you make money from owning stocks, the government taxes your gains? You will also have to pay capital gains taxes when you sell them for a profit. It is generally advantageous to pay taxes on profits when you hold a stock for longer than a year.
However, if you have a successful company and the profits are legitimate, then you may be able to deduct your business expenses (depending on your business structure). You can also save money by deducting the amount you pay for health insurance.
In addition, a company allows you to deduct your childcare and dependent care expenses. Obviously, these aren’t things that you can deduct with stock ownership.
You can save money on taxes by owning shares of a C-Corp or an S-Corp. In addition, you can save money if you are self-employed as an employee by using a limited liability company.
Higher Expected Value
When most people think of investing, they dream of being able to retire early. This is expected of course, because the main reason most people work is so that they can stop working and enjoy the remaining years of their life. And what better way to enjoy your productive years than by gaining enough money and knowledge to be part of the “Rich and Famous?” But is there a more sure-fire way to wealth than by investing?
There are many different kinds of investments, but for this article, we will approach the topic as if you were going to invest in some businesses or companies. So why is investing in a startup business a safer and more certain way to become part of the “Rich and Famous?”
There are two main reasons why I believe this:
Expected Value
We all know that because you can’t rely on one single event to make you rich (for example, asking to win the lottery), you must instead rely on the probabilities of the events. In other words, the expected value…
Now, when you gamble on a company stock, you are relying on the stock value to increase in the future. This is the best case expected value. The worst case expected value is that you sell the stock and neither you nor the business receive returns.