They may be thinking that they may be better off in investing in real-world business producing real assets in the areas that they are familiar with or interested in; and getting their investment returns from the real-world business.
Let me share my thinking because I too have been thinking about it in my earlier days for many moons.
Unless you have the entrepreneurship spirit in your blood and you need to fulfill your dream and reach the Self-actualization stage in Maslow's hierarchy of needs. I said: "GO FOR YOUR DREAM!"
But, it is just about investment returns from pure financial reasons, then you are taking more risks than expected.
Investing in stock market is likely to be exposed to two risks - market risk and stock risk and these risks can be mitigated through proper portfolio risk management and control.
You just need to acquire the relevant knowledge and skills to manage your risks.
One clear advantage in investing in the stock market if you treat it seriously as your business entity is that there is virtually zero fixed cost overhead.
But, investing in the real-world business, there is fixed and variable costs overhead, and in bad times your fixed costs overhead is going to kill you earlier than expected.
In running a real-world business, there are just too many risks to manage and control, and list out some of common risks associated with running a business:
1. Operation Execution Risk
2. Sales Risks
3. Pricing Risks - under-pricing or over-pricing
3. Supplier Risk
4. Customer Risk
5. Cashflow Risk
6. Refinancing Risk
7. Competitors Risk
8. Market Risk
9. Staff Risk
10. Fraud Risk
So do you still see investing in stocks is far riskier than investing in the real-world business?
I said again, unless you have the entrepreneurship spirit in your blood and you need to fulfill your dream and reach the Self-actualization stage in Maslow's hierarchy of needs. Then I said: "GO FOR YOUR DREAM!"
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