How Successful Investors Get RICH

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Topic: How To Invest

Investor Toolkit: How to avoid the pitfalls – and reap the rewards – of investing your money in your own business

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successfully investing your money. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away.

Today’s tip: “Starting a business is a gamble, but payoffs can be huge and planning cuts the risk.”

Canadians can still get rich as employees — ask any Canadian bank president. However, high-paying jobs are hard to find. Most corporate structures are pyramid-shaped, with a few high-paying positions at the top and many lower-paying jobs down below. Moreover, because of the recession and continued high unemployment, more people than ever are vying for jobs — especially those that pay well.

Your best chance of getting rich is by investing your money in your own business. But this is risky, because many new businesses wind up failing. As many as 80% go bankrupt or simply shut down in their first five years, according to surveys. Many owners of failed enterprises lose their life savings, if not their homes and marriages.

Why new businesses fail:

  • Owners underestimate the amount and variety of work. In a small business, everything is your job, until you hire somebody to do it.
  • Owners run out of capital to pay their bills before the company’s profits begin to flow.
  • Some “bright idea” businesses fail because there’s no demand for their product or service.

How Successful Investors Get RICH

Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor.

How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

How to improve your chances of success:

  • Keep your job and run the business on the side until it starts making money.
  • Make sure you have adequate capital. Apply for loans, lines of credit, merchant charge-card accounts and so on before you need them.
  • Choose a “me-too” business over a pioneering one. Improve on existing products or services, or buy a franchise.
  • Make it your life’s work. Learn all you can about the industry, and keep learning. Plan on working long hours for many years without supervision or immediate rewards. Above all, stick with it. Many entrepreneurs go broke two, three or more times before they launch the business that makes their fortunes.

Note to investors: the odds against success in your own business apply just as much to shares in start-up businesses that trade on the stock exchange. If anything, the odds against publicly traded start-ups are worse; that’s because some publicly traded start-ups are created by stock promoters who merely go through the motions of building a business, while their real business is selling stocks to the public.

That’s why it pays to downplay junior stocks in your portfolio. Instead, invest most of your money in well-established companies with a history of sales and earnings, if not dividends.

Next Wednesday, August 18, 2010, Investor Toolkit will look at how investing your money in your home should fit into your overall investment strategy.

If you’d like me to personally apply my time-tested approach to your investments, you should consider becoming a client of my Successful Investor Wealth Management service. Click here to learn more.

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