Investing in Your Own Business

You can apply the same kind of analysis to the possibility of opening your own business. Starting a business can be a great and profitable endeavor, but it is also risky. In fact, I would not be surprised if the risks were even greater than those of the stock market. You have to do your homework. What will it really cost to get up and running? How much business will you need to stay cash-flow positive? To earn a profit? What will you do if things don't go well?

And I caution you not approach becoming an entrepreneur with the thought that you'll have more control over your financial future. Your business is still at the mercy of forces over which you have no control. You can't control the customers you serve, the competition for those customers, or the economy as a whole. If you succeed, more power to you. And most likely a large part of that success will be your ability to withstand downturns and remain open to change -- not too different, really, than the attributes required of a successful stock market investor.

Don't Give Up on the Markets

Whatever you decide, I urge you not to abandon the stock market entirely. As compared to other asset classes, it has historically delivered solid long-term returns, and provides a relatively easy, inexpensive way to get exposure to a broad variety of companies, industries and markets. I don't know if the recent market rally will continue, but I am still steadfast in my conviction that the markets offer a strong opportunity for long-term growth.

I hear every day from co-workers, friends and clients just how frustrated they are with the whole business of investing. And the desire to pursue some new investment opportunity is understandable and, in many cases, healthy. But I caution you against betting your entire portfolio on any investment, even an investment in yourself.