When it comes to determining how to grow your net worth, many investment options can help you accomplish those goals. Many people weigh the options of starting their own business or investing in companies that others built.
Which path provides the most financial freedom? Ultimately, that answer is contingent upon the individual in question. Here, Jason Kulpa, net worth expert and experienced entrepreneur, provides insight on making financial decisions that will increase net worth.
There are many similarities when it comes to comparing stock market investing and entrepreneurship. Becoming an entrepreneur has been popular in recent years as many people in the business world like the concept of working for themselves. Ultimately, the decision comes down to how active you wish to be in your approach, and the level of risk you are willing to take.
Understanding of the Business
Both investing in the stock of an existing company and creating a new business require an extensive level of knowledge of specific business requirements. To make a strategic decision, one must have a good understanding of the business model, a thorough analysis of the markets, and a full strengths and weaknesses analysis of competitors. You must ultimately decide between investing in your own idea or becoming a co-owner and supporter of another business through stock ownership.
Risk
Entrepreneurs encounter risk as they are tackling an entirely new endeavor. An investor takes a different kind of risk when they choose to invest their funds in other companies; they enter with the belief that they will perform strongly and provide a reasonable rate of return. Either option has the risk of losing money in the event the companies fail or cannot produce strong enough profits.
Investment Goals
Both investment vehicles require specifying goals to be accomplished. Entrepreneurs commonly establish desired outcomes of their business and focus on what needs to be done to achieve those goals. Investors often have a long-term strategy and must adapt their stock investments to ride out fluctuations to achieve their financial goals over time.
Making the Choice
Ultimately, both stock market investing and entrepreneurship have the capability of increasing one’s net worth. Some of the most significant differences between the two involve the diversification of investments, the amount of capital outlay, and the potential level of risk. When starting your own business, you will be focused on one idea, specifically to make that venture successful. Entrepreneurship generally requires a lot of capital to get an idea off the ground, with the risk that anything you lay on the line can be lost if things go south. However, the potential return is unlimited if your idea is a success.
On the other hand, stock market investing provides the opportunity to diversify investments across multiple platforms; therefore, the risk is mitigated in the event one company or idea fails. There is undoubtedly risk if the stock market or economy as a whole sees a downturn, but risk and reward are balanced. However, unlike entrepreneurs, stock market investors can take a passive approach and pursue a separate daily career.
About Jason Kulpa
Jason Kulpa is a serial entrepreneur and the Founder and CEO of UE.co, San Diego’s Fastest Growing Business multi-year award winner, and a Certified Great Place to Work multi-year winner. Mr. Kulpa is a San Diego’s two-time winner of the Most Admired CEO Award of the San Diego Business Journal and also a semi-finalist for the Ernst and Young Entrepreneur award. Under Mr. Kulpa’s leadership, in 2018, his teams volunteered at over 24 events and worked side-by-side to improve the San Diego community. They hosted a gala dinner benefiting individuals with autism, cheered on Special Olympic athletes as they broke their records on the track, and brought school supplies and cold-weather gear to students impacted by homelessness. Jason’s mission is to bring awareness, support, and inclusion for special needs causes.
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