We all dream of having a comfortable life where we can provide for our loved ones, treat ourselves occasionally, and have financial security. But achieving our dreams often requires having enough resources, pushing us to work harder and find ways to earn more.
Being employed is the first thing that comes to mind when we say we need a steady source of income. But sometimes, our regular paycheck is enough to support our ever-growing needs. We then think of ways to budget our limited income, or for the entrepreneurial, to earn more by offering products or services for profit.
Our income for being employed or for being an entrepreneur is called an active income because we earn by exerting effort to work. But did you know you can earn passive income by letting your money work for you? This is called passive income.
Now you consider two options: either start a business or invest in stocks. Starting a business allows you to earn active income, while investing in the stock market allows you to earn passive income.
Before you decide, here are some things you should think about:
Consider the risks involved
Asking the question, “Should I start a business or invest in the stock market?” is like choosing between caramel and vanilla. There is no correct answer because it all boils down to preferences, personal skills, level of knowledge, and resources.
It is, however, important to emphasize that investing in stocks and starting a business both come with risks. Either way, it is possible to lose all your money. This is why it is important to understand what you are getting into before taking the leap.
When starting a business, coming up with the capital is usually the biggest hurdle. You should factor in government fees, monthly operational expenses, equipment, and other assets that you need to launch your business.
Keep in mind that there are also chances that your business would slow down, not earn, or worst, go bankrupt. Although you own the business, your cash flow is not as liquid and you may not be able to pull out your money if you have an emergency.
Despite the difficulties, many still venture into business because of the possibility of high returns. But reality is that it’s not for everyone. Another option is to invest in stocks.
