Recently, the investment trend has become more and more fierce around us. We often hear investment courses preach: "As long as you know how to invest, be a friend of time, and use the power of compound interest, you can become a rich man and achieve financial freedom!" However, is this really the case? Compound interest, this mythologized concept, is actually a huge lie. Can investing really make you rich? It just eats away at the cost of your time in silence.
So why can't the vast majority of people become rich by investing? Why is entrepreneurship the ultimate choice for the wealthy to achieve financial freedom? If we don't choose to start a business, does it mean that we don't have access to financial freedom? Today, I'm going to share with you some profound insights that may have never been mentioned. These are all practical and dry goods that I have spent a lot of time sorting out to help you break the shackles of poverty! Want to know whether starting a business or investing is the best option for you? We can analyze it from the following seven points.
First, the costEntrepreneurship is an adventurous journey that requires us to take the first step bravely. Regardless of the size of your business, you'll need a certain amount of start-up capital. This includes not only basic expenses such as computers, workplace rent, water and electricity bills, employee salaries, etc., but also necessary tools such as various computer software. These costs are the cornerstone of entrepreneurship and are indispensable. In the early stage of starting a business, it is likely that you will face the dilemma of having no customers, having a thin business, or even being unable to pay a salary for yourself. Therefore, it is very necessary to prepare a reserve fund for 6 months to a year to cope with the difficulties and uncertainties in the early stage of starting a business.
Although there seems to be no threshold for investment and no cost is required, you must know that if you want to get considerable returns on the **, you still need to invest a certain amount of principal. The size of this principal varies from person to person, and it can be more or less. Personally, shortly after graduating from college, I purchased a course on Investment**. At that time, I was financially strapped for money, but when I heard that I could make my first pot of gold on ** even with a small investment, I studied it hungrily.
In the sea of long-term and first-class investment, I have purchased all the books, and each one is like a treasure waiting for me to discover. However, there is no end to the sea of books, and I am always eager to open the next one, eager to find more secrets of wealth. I wondered, can I really make money after learning these skills? The answer is heavy, yes, but only if your principal is thick enough! If you don't accumulate enough principal, or even no original capital, then it will be difficult for you to dig out the treasure of wealth, no matter how talented you are. At that time, I only had about $2,000.
One night, I sat alone and meditated, my thoughts wandering. Even if I did study hard and become an investment genius and achieve 100% profit in a year, it would be amazing, right? Even Warren Buffett has an annual return of only 20%. However, even if I did, I ended up with only $4,000. That money wasn't even enough to cover my daily expenses. From that day on, I completely gave up on in-depth investing, and chose to invest in ETFs or SAP 500. I first ran to start a business and plunged into the wave of the Internet. Why do I only invest in ETFs and not **? I'll tell you more about the reasons for this later.
Second, the riskWhen we face each challenge, we should not only focus on the gains after success, but also on the possible consequences of failure. Can we accept these consequences calmly and afford them? Just like investing, if we don't use high-risk leverage and borrowing, but control our funds within a tolerable range, then the risk is actually very low. The worst-case scenario is the loss of cash in hand. However, starting a business is significantly more risky. But keep in mind that the size of the risk often depends on how well we understand things. On the road to entrepreneurship, we are turning the knowledge we have accumulated in the past into practical value, which involves a deep understanding of the industry, business, and products. Therefore, before embarking on the steps of entrepreneurship, we need to fully assess our understanding and preparedness so that we can better deal with possible risks.
Behind the deliciousness of KFC fried chicken lies the original intention and persistence of a catering giant. Colonel Sanders, the founder of KFC, originally ran a small restaurant on the side of the road. It's a small restaurant with a unique character, especially his crispy fried chicken, which is loved by diners. However, as fate would have it, the hotel's business was ruined by the highway diversion, and Colonel Sanders had to sell the fried chicken recipe to other restaurants. After 109 rejections, someone finally recognized his talent. Since then, the flag of KFC has flown all over the world. Behind every successful enterprise and every rise of business, there are countless efforts and persistence. An in-depth understanding of the industry can reduce risk and enhance controllability. Conversely, factors beyond our control mean higher risk.
Third, controllabilityThe risks of starting a business are there, but the controllability is gratifying. What is controllability? In short, it is decided by who determines the main factors that affect the development of things. If it is controlled by itself, it is highly controllable; On the contrary, the controllability is low. Once external factors intervene, the rudder of success and failure can be instantaneous. Investment profitability largely depends on the trend of the market - such as mass consumption concepts, external investment institutions, geopolitics, and even those difficult "black swan" events. These environmental factors can trigger volatility, making it difficult for even the most savvy investor to fully control the situation and avoid being disrupted by sudden changes. Therefore, we need to set a stop loss point and stop loss in time at a certain key point to avoid greater losses. There are so many uncontrollable factors in investing, and the sentiment, behaviour and overall trends of the market are beyond our control. That's why it's so important to set your stop loss.
Therefore, I tend to invest in ETFs that have been screened out, so as to avoid a lot of uncontrollable factors. I have an old friend who has been investing for a decade and he told me that he has been researching ** for the past eight years. Although he made some money, there were times when he lost money. He did the math carefully, and found that in the last year, he only made a profit of seventeen or eighteen thousand, and he thought that it was better to spend all his time in business. Passive investment** is OK, you don't need to keep an eye on the market every day, and you can get an average profit of 11% a year, which is almost the same as the income of investment**. So since last year, he has rarely spent time researching **, but has invested most of his funds in **. He believes that no one can accurately ** the trend of the market, but only guess how the market will go through a high probability. As long as you can hit six or seven times out of ten, then your method is an effective strategy that can be used all the time. Because investing in this matter, it has probability, no one can invest ten times and ten times to make a profit, if there is, it is just a bonus of luck, not how capable you are. Although entrepreneurship sometimes requires luck, hard work can improve many things, such as performance is not good enough, you can be diligent, find customers, train the sales team, improve service quality, etc., these can be improved through hard work, and hard work equals reward. Investment is not a return on hard work, it largely depends on the market, so the controllability of entrepreneurship is still relatively high.
Fourth, the time contribution. If you are not a full-time trader, you don't need to spend too much time keeping an eye on the market and still make a decent profit. Starting a business, on the other hand, requires a lot of time and effort, especially at the beginning of your career. At this stage, our efforts and rewards are often disproportionate, and we are so busy that we don't even see obvious results for a period of time. However, once the business is on the right track, its returns will grow exponentially. Just like a small sapling, it takes years of careful care and patient cultivation before it can grow into a towering tree and bring abundant fruits. Therefore, for entrepreneurs, it is necessary to have enough perseverance and patience and keep working hard in order to reap full rewards one day in the future.
Fifth, the rate of returnIn this era of opportunity, the rate of return on entrepreneurship is like a starry star. Nowadays, many low-cost entrepreneurial projects have sprung up, such as running YouTube channels, communities**, express delivery and receiving, etc., which bring us convenience and huge business opportunities. Even a traditional business, such as a car wash, can make a monthly profit of 20,000 to 60% with just a few machines, water bills and some car wash supplies.
However, the return on investment is not as easy to obtain as one might think. **Metrics show an annual return of only 11% and a monthly return of only about 1%. This shows that if you want to make a profit on your investment, you must build on a strong principal. Some people may say: "Wouldn't I be lucky if I invested in companies with huge potential, such as Tesla a few years ago, and could get dozens of times the return in a short period of time?" However, this is not the case. As we all know, the listed companies we focus on are often past their growth period. In other words, most people invest not at the bottom**, but on the slopes or even peaks. Such an investment is not only difficult to obtain the expected returns, but may also become a pick-up man.
Therefore, our expectations for ROI should remain rational. Don't be fooled by a single skyrocketing opportunity, but look at the average. After all, although the road of entrepreneurship and investment is full of challenges and challenges, only by being steady and rational can we go further on this road.
Sixth, the level of complexity. Starting a business is a challenge that requires a combination of skills. It requires us to be like all-rounders, not only to be good at management, marketing, product development and upgrading, cost control, etc., but also to be comfortable in various fields. In this process, we should not overemphasize the identity of the boss, but focus on fulfilling the boss's responsibilities. Especially for entrepreneurs who were not born into wealthy families or do not have strong backing, it is even more important to carefully control expenses in the early stages of running a business. We need to manage the costs of each link finely, strive to improve profits, and gradually scale up based on that. This is in line with the entrepreneurial logic of ordinary people, because only when profits are improved, can our business continue to develop and grow gradually.
Companies that easily get financing and go public often have a very good product behind them. Their goal is not just to earn capital, but to achieve long-term business value. Therefore, the complexity of starting a business cannot be underestimated, and it requires us to skillfully blend a variety of different skills. It's like a doctor with great medical skills, if he doesn't know how to promote himself, then his talent may be buried. Without the recognition of patients and the support of performance, his clinic would also struggle to sustain. Compared with entrepreneurship, investment is more about experience. It's like learning, no one is born to do something, but once learned, it's done once and for all. On the road of investment, we need to continue to accumulate experience and improve our judgment and decision-making ability in order to be invincible in the rapidly changing market.
Even if we read countless books and take countless courses, it is difficult to gain experience points. It's like some simple investment theory, can't we really grasp it? In fact, these theories are not difficult to understand, but the difficulty is that we have not experienced them firsthand. It's like the story we heard when we were kids, we were told to go to the doctor when we were sick, and the doctor would get better after the injection. However, it was when we got really sick and faced with the injections that the fear really set in. Today's investment masters have grown up from the painful lessons of the past. They have developed a habit of self-discipline, and this stems from the fact that they have experienced the ups and downs of the market firsthand. Those who continue to make profits in ** often have super self-control. They are able to harness their desires and not be swayed by market fluctuations. This kind of self-control is the most important ability in investing!
Seventh, liquidity. If you already own a business and want to sell it for some reason, it's not easy. Because of the characteristics associated with the business, it is inherently less liquid. However, the liquidity of investment products is much higher, such as the well-known **, real estate, **, etc., which are highly accepted, the threshold is relatively low, and it is easy to buy. Businesses, however, are different. For example, if there is a beauty salon that wants to **, the outside world will inevitably speculate whether there is a problem with the operation. There are many doubts involved: whether it is profitable, whether there are sufficient requirements and thresholds for investors, etc. For example, if I don't know anything about the beauty industry, even if I want to invest, it is impossible to take over on my own. It is necessary to have an experienced person to work with. This means that a business is not suitable for everyone to participate in, and its characteristics and thresholds determine its scarcity and value. But because of this, its liquidity is limited. Therefore, if your investment purpose is to cash out at any time, then investing in assets is a better choice!
We are often told that starting a business is a high barrier to entry, illiquid, and full of risks, so it can't be tried lightly. However, if you aspire to create and consistently enjoy high returns, or even double your income by scaling your business, then entrepreneurship is undoubtedly an effective way to build wealth. If you're already an entrepreneur looking for a way to break through the bottlenecks in your business, but you're feeling lost and helpless, then I invite you to join us for our upcoming Enterprise Growth Summit on January 17-19, 2024. In this three-day summit, we'll dive into the three key elements of business success.
First of all, how to pinpoint the positioning? In a highly competitive market, how to make your brand unique and quickly capture the minds of consumers? Secondly, how to detonate the brand at the lowest cost? We'll share how to quickly and widely promote your products and services through virality. Finally, in order to achieve long-term profitability, we must focus on the design of the business model. How do you build a diversified, sustainable revenue ** that will keep your business alive and thriving, even when there are no new customers? Investing is an important skill, but it's not the only one. Learning to start a business and understanding the core logic of business operations is the ultimate in the business world. Don't hesitate any longer, let's find a breakthrough in our careers and a way to grow our wealth in this event.
If you ask me, what is the smart way to build wealth, invest or start a business? I'll tell you, it's both, but when it comes to a low-cost, shortcut to financial freedom, entrepreneurship is the best option. Investment, which can cost us valuable time and opportunity costs. I have seen countless people who have silently endured jobs they don't like, year after year, for twenty years, for the sake of so-called wealth freedom. They cling to that boring job, but they are afraid to devote themselves to what they really love, investing just to make money, and swallowing their anger for the sake of a distant retirement. When better opportunities arise in front of them, they often choose to turn them down, missing out on opportunities that could have changed their lives. The true freedom of life is not only the comfort of the end, but also the excitement of the journey. Imagine that when you are rich, you spend the first few days in the sun by the sea, but can you enjoy the monotony of life day after day, year after year? Life needs to be full and meaningful, you need to devote yourself to the cause you love, and you need to enjoy the process of creation. Rather than exchanging decades of hard work for a short leisurely retirement, it is better to make life full of struggle and meaning, which is the real freedom and the greatest happiness brought by wealth. List of high-quality authors