Which is Better, Starting A Business or Investing in Stocks?

December 29, 2020 RUN System

Choosing to start a business or invest in stocks may puzzle some people. Good for you, it is not an insoluble dilemma. Investing in stocks has had a great reputation as a strategy to build wealth. However, the entrepreneurship ‘trend’ nowadays has started to blow. Of course, you would need a guide before choosing which one is the best for you. Here are five things you would need to consider.

stocks

Time Needed

When you choose to start a business, you would not expect to gain profit in a month or two. Starting a business is not an instant way to gain profit that you wish to get. It is very common for a business to be profitable after a long period of time. Let us take a look at how long Amazon be profitable, 9 years, while Federal Express took 4 years. However, as the internet being people’s daily consumption, small businesses can be profitable in just a few months.

Meanwhile, you can see capital gains and losses on stock investments within minutes. Yet, real investors do not buy and sell quickly, but rather make long-term investments to get real profits which can take years. This depends on the stock you choose and the economic conditions that occur.

Potential Return

A small business may value thousands to millions of dollars. There are only a few businesses compared to thousands of stockholders that make the gain from stock sales very diluted. A successful small business will make more profit than stocks that get its profit from capital gain and company profit distribution (stock dividends). Even, the profit your business makes will exceed the capital you spend. However, it is important to remember that small businesses are in higher risk of failing. The more profit you get, the higher the risk you must bear.

Capital

Investing in stocks can be much cheaper and easier than starting your own business. Although, in recent days when the internet has been a basic need, you can reach customers from around the world much easier with internet-based business. This will surely advantage you as a business owner.

Skills

I would say you would need more skills to learn when you choose to start a business. This is because you can just buy an index-based fund that will ease you in starting to invest in stocks since it will need little skills to do so.

When you choose to start a business, you are the one who manages and makes the decision. You must also be ready if your phone rings anytime you are needed or when problems arise. Meanwhile, the same things would not happen if you invest in stocks.

The Risks

Once you put your money to investment, your money is always at risk. There is more likely that you will lose all your money on business than spending it on high-quality stocks. That is why it is important for you to start a business with as little capital possible. However, nowadays you can start a small internet-based business that is possible for little capital with lower risk. It will have a lower risk than investing in stocks.

If you decide to start a business, there is one key instrument that will help your business run efficiently. It is to have a great business management tool. RUN System is an integrated ERP software that will help you simplify the operational management of each business process. RUN System is an instrument of control over the execution of strategic activity in your business process.Find out more about the products RUN System has for you and become our partner for great business management!