investing in the stock market does not seem right

[RealDreams]

So after building a business that makes 50k in gross revenue on average a month (last month 10-20k more), I decided to put around 100k in the stock market.

Almost a month later, after realizing how slow this money will grow, I cannot but feel this whole thing is a "scam". Or said better, my business makes so much more money than the stock market ever will even if I keep the money invested for 50 years.

I can't believe this is the path most people use to make money, it sounds like horseshit to me. I can understand if you had 10 million and parked 1 million, but for anything below that, it just will not work. It can't. I've read this in MJ's books previously but didn't truly realize until now.

I'm 24 and I'd rather buy a supercar at this point with half of that money, instead of seeing it grow at 4% every year. Not sure why I think this way but the thought of even being alive at 60 years old is not appealing to me. In fact getting older is what I fear the most. Maybe I think this way because I can make that same money back in 3 months, so why make it illiquid and put them in the stock market? I might as well buy some things with them and enjoy life?

I think my beliefs got shaped by the reddit crowd of FIRE where they say you must be frugal and say bye bye to enjoying life while you're young. What I seem to forget is these people work at 9-5 jobs for 3k a month so their advice can't really apply to my level of earnings.

My main objective of parking money was to live off my investments, but figured out I need way more than 100k to be able to do that, hence, again, the realization that this whole "stock market" worshipping from the FIRE crowds is irrational, because the returns are so small that it's definitely not how people get rich young. My beliefs crashed again.

 

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[Bounce Back]

I'd say if your someone who can repeatedly build something to the scale of 50k/month (you didn't share profit so 50k/month could be nothing tbh) then yeah do that for growth. ETFs or whatever traditional investing for diversification (it always somewhat feels scammy though).

Important thing is take some chips off the table from time to time you know? Don't want to wake up at 60 broke.

 

[RealDreams]

I'd say if your someone who can repeatedly build something to the scale of 50k/month (you didn't share profit so 50k/month could be nothing tbh) then yeah do that for growth. ETFs or whatever traditional investing for diversification (it always somewhat feels scammy though).

Important thing is take some chips off the table from time to time you know? Don't want to wake up at 60 broke.

profit margin is around 60%. I think my mistake has been the opposite of taking some chips off, I literally put 75% of my payout into the stock market, whilst I wish I only put 25% and kept the rest to upgrade my lifestyle. The money isn't locked into the broker but if I sell my positions it's gonna trigger some taxable events and it might be a chore to deal with

 

[NervesOfSteel]

So after building a business that makes 50k in gross revenue on average a month (last month 10-20k more), I decided to put around 100k in the stock market.

Almost a month later, after realizing how slow this money will grow, I cannot but feel this whole thing is a "scam". Or said better, my business makes so much more money than the stock market ever will even if I keep the money invested for 50 years.

I can't believe this is the path most people use to make money, it sounds like horseshit to me. I can understand if you had 10 million and parked 1 million, but for anything below that, it just will not work. It can't. I've read this in MJ's books previously but didn't truly realize until now.

I'm 24 and I'd rather buy a supercar at this point with half of that money, instead of seeing it grow at 4% every year. Not sure why I think this way but the thought of even being alive at 60 years old is not appealing to me. In fact getting older is what I fear the most. Maybe I think this way because I can make that same money back in 3 months, so why make it illiquid and put them in the stock market? I might as well buy some things with them and enjoy life?

I think my beliefs got shaped by the reddit crowd of FIRE where they say you must be frugal and say bye bye to enjoying life while you're young. What I seem to forget is these people work at 9-5 jobs for 3k a month so their advice can't really apply to my level of earnings.

My main objective of parking money was to live off my investments, but figured out I need way more than 100k to be able to do that, hence, again, the realization that this whole "stock market" worshipping from the FIRE crowds is irrational, because the returns are so small that it's definitely not how people get rich young. My beliefs crashed again.

Stock market requires very special skillset. You must be able to invest time to evaluate a stock before investing.

But money does grows in stock market. The stock I bought back in August of 2021 @ 284, closed today at 1041, whilst it was highest at 1090 a few days ago!

But this is nothing in comparison to my business's growth!

 

[MJ DeMarco]

I can't believe this is the path most people use to make money, it sounds like horseshit to me. I can understand if you had 10 million and parked 1 million, but for anything below that, it just will not work. It can't. I've read this in MJ's books previously but didn't truly realize until now.

As I like to say, you never know how hot the fire is until you stick your hand into it.

The stock market is the average person's way to wealth in 30-40 years.
Entrepreneurship is the above-average person's way to wealth in 5-10.

Congrats on breaking into the Fastlane!!

 

[Canadoz]

But anyone with a pension fund is already indirectly investing in the stockmarket?

 

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[RealDreams]

As I like to say, you never know how hot the fire is until you stick your hand into it.

The stock market is the average person's way to wealth in 30-40 years.
Entrepreneurship is the above-average person's way to wealth in 5-10.

Congrats on breaking into the Fastlane!!

This probably deserves a post on its own but MJ, your books changed my life.

I was 19 when I first came across Unscripted and I was reading it in high school literally during classes and my teachers got pissed off at me cause I wasn't following the lessons. I just knew what I wanted and those lessons weren't driving me towards that goal anyway.

The change was huge in my mindset. Most of all, the concept of hyperreality. It was something I had not heard of anywhere else, and it totally resonated with me to the point I removed myself from all kinds of social media to focus (literally removing my accounts). I realized I wanted financial freedom more than social validation.

Also stopped playing video games definitely once I realized how they're designed to hook you in and make use of your dopaminergic system, so instead of accomplishing things in real life, you accomplish things in a world they have designed for you. 3 years later that game is "old" and you have to move on to a new game. I know so many people stuck in that loop. If someone is a top gamer they can be a top winner in real life if they only switched their focus and objectives.

And I started from nothing, had narcissistic parents who never believed in me—had no money, just a willingness to learn the skills so money wouldn't have been necessary to start a business (coding in particular).

When you're rock bottom you realize making excuses won't do you any good, you either do the things you have to do or you'll never change your situation. And you only fool yourself by not doing that, and why would you do that? It's your life.

I also had to fail a ton but ultimately managed to escape from that shitty reality. The real eye-opener is when you start making way more money than your family, and you realize it’s because you did the opposite of what they told you. It shows just how important it is to trust yourself instead of taking advice from people who aren't living the life you want.

 

[biophase]

So after building a business that makes 50k in gross revenue on average a month (last month 10-20k more), I decided to put around 100k in the stock market.

Almost a month later, after realizing how slow this money will grow, I cannot but feel this whole thing is a "scam". Or said better, my business makes so much more money than the stock market ever will even if I keep the money invested for 50 years.

I can't believe this is the path most people use to make money, it sounds like horseshit to me. I can understand if you had 10 million and parked 1 million, but for anything below that, it just will not work. It can't. I've read this in MJ's books previously but didn't truly realize until now.

I'm 24 and I'd rather buy a supercar at this point with half of that money, instead of seeing it grow at 4% every year. Not sure why I think this way but the thought of even being alive at 60 years old is not appealing to me.

When your business stops making money and you only have $100k in the bank, you will wish you socked away 75% of the profits.

Also when you are 60, you will thank your 25 year old self for doing so.

Or would you rather be 60 and still working whether it be a job or still running a business?

My main objective of parking money was to live off my investments, but figured out I need way more than 100k to be able to do that, hence, again, the realization that this whole "stock market" worshipping from the FIRE crowds is irrational, because the returns are so small that it's definitely not how people get rich young. My beliefs crashed again.

There are many people on this forum that have made good money for many years. These same people are still broke in relation to being in the fastlane.

 

[thehawkman]

When your business stops making money and you only have $100k in the bank, you will wish you socked away 75% of the profits.

Also when you are 60, you will thank your 25 year old self for doing so.

Or would you rather be 60 and still working whether it be a job or still running a business?

So much this! You never know when your business stops working, or maybe you even become incapacitated (Heaven forbid). Don't really agree with MJ s "hate" on the stock market. Yeah, it's slow, and yeah it's scammy, but it's not supposed to be your main source of income. But even with it being scammy, the gains in the long term with doing judicious investing, by investing in solid companies are good and doing cost averaging. And it is passive income. It's so cool to get mails informing you that your dividends have been paid out (from what i know in the US they are paid quarterly, where I'm from they're paid yearly). What I do with them is reinvest them. So basically next year I get more shares, so even bigger dividends the year after that. I literally never sell, I just buy more. And I don't waste time watching the market, learned this is a waste of time. I've learned one lesson from the 2008 crash and by reading Jesse Livermore. The stock market players want you to buy at the top and then try to scare you into selling at the bottom. Back then it was all "there is a crisis, companies lost money". Fast forward once the "crisis" is over, prices are back to normal and almost no company went backrupt. Had I panicked and sold, I would have lost like 90%. If anything, I wish I coulf afford to invest more, right now my portfolio is ridiculously small.

Having money saved allows you to work only if you want to, you will be going to work because you have nothing better to do and retirement doesn't suit you, not because you have no choice.

 

[NewManRising]

The whole reason the FIRE crowd and others preach the stock market is because they are making gains and retiring off all the young and newcomers putting money into the system. That's why they preach it so hard. If you are not putting money in, they have none to retire with.

Once you realize the scam, you can then understand why they go to great lengths to sucker you into investing. Telling some 20 yr old kid to put in 10% of his paycheck ain't going to do shit for him. But if you convince millions of kids or newcomers to do this, then it adds up and it great for the FIRE crowd. The trick is, is to convince these kids and newcomers to wait 40 years and they can finally retire and be rich.

It's a system built on making sure there is always a new investor to keep the system afloat. Sounds very risky to me.

 

[NewManRising]

So much this! You never know when your business stops working, or maybe you even become incapacitated (Heaven forbid). Don't really agree with MJ s "hate" on the stock market. Yeah, it's slow, and yeah it's scammy, but it's not supposed to be your main source of income. But even with it being scammy, the gains in the long term with doing judicious investing, by investing in solid companies are good and doing cost averaging. And it is passive income. It's so cool to get mails informing you that your dividends have been paid out (from what i know in the US they are paid quarterly, where I'm from they're paid yearly). What I do with them is reinvest them. So basically next year I get more shares, so even bigger dividends the year after that. I literally never sell, I just buy more. And I don't waste time watching the market, learned this is a waste of time. I've learned one lesson from the 2008 crash and by reading Jesse Livermore. The stock market players want you to buy at the top and then try to scare you into selling at the bottom. Back then it was all "there is a crisis, companies lost money". Fast forward once the "crisis" is over, prices are back to normal and almost no company went backrupt. Had I panicked and sold, I would have lost like 90%. If anything, I wish I coulf afford to invest more, right now my portfolio is ridiculously small.

Having money saved allows you to work only if you want to, you will be going to work because you have nothing better to do and retirement doesn't suit you, not because you have no choice.

I admit I invest in the stock market and crypto. I also have a savings account. But I am fully aware it's not a business and I will not get rich. A business is the best bet for that.

However, I am up in all my investments. I see this as a win. I'd rather have some money working for me and increasing than it sitting in a checking account and losing value.

It is the same way as working a job. If working a job helps you in the process of getting to the Fastlane then it should not be viewed as negative. MJ has said this himself too. But if your strategy is to stay with the job as your wealth vehicle then that's a problem.

We all know a job and investments are fixed and/or with very few if no variables to manipulate. Plus, both are inherently risky as opposed to taking a risk starting and building a business.

 

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[MJ DeMarco]

It's a system built on making sure there is always a new investor to keep the system afloat.

It's called the greater fool concept.

Yeah, it's slow, and yeah it's scammy, but it's not supposed to be your main source of income.

Nowadays I believe the stock market is the least "scammy" as ever... why?

Two reasons:

1) Unprecedented globalization: Because unlike other decades prior, the world is now a global economy with major market companies being global, not just American. You buy Apple or Google or NVDA, you're buying a global corporation.

2) US Dollar inflation and deficit policy + reserve currency dangers: The dollar continues to erode in power. Buying assets in the form of stock is a great inflationary protector.

Given a choice, I'd rather own $10000 in QQQ or SPX than $10000 sitting in a bank. Over time, the latter is guaranteed to lose money. The former, not so much.

Don't really agree with MJ s "hate" on the stock market.

Not sure where you get that I hate the stock market. I have millions in the stock market. I also get paid passively every month in excess of 5 figures, more yearly than the average small company CEO makes. My "hate" comes from the "live poor, die rich" philosophy, as if time doesn't depreciate and is a commodity worth marginalizing in a frugality scheme until you're 60 or 70.

 

[socaldude]

Nowadays I believe the stock market is the least "scammy" as ever... why?

Not to mention the immense liquidity. Banks and Corporations are given low interest debt to basically buy back their own shares. LOL

 

[thehawkman]

This probably deserves a post on its own but MJ, your books changed my life.

I was 19 when I first came across Unscripted and I was reading it in high school literally during classes and my teachers got pissed off at me cause I wasn't following the lessons. I just knew what I wanted and those lessons weren't driving me towards that goal anyway.

The change was huge in my mindset. Most of all, the concept of hyperreality. It was something I had not heard of anywhere else, and it totally resonated with me to the point I removed myself from all kinds of social media to focus (literally removing my accounts). I realized I wanted financial freedom more than social validation.

Also stopped playing video games definitely once I realized how they're designed to hook you in and make use of your dopaminergic system, so instead of accomplishing things in real life, you accomplish things in a world they have designed for you. 3 years later that game is "old" and you have to move on to a new game. I know so many people stuck in that loop. If someone is a top gamer they can be a top winner in real life if they only switched their focus and objectives.

And I started from nothing, had narcissistic parents who never believed in me—had no money, just a willingness to learn the skills so money wouldn't have been necessary to start a business (coding in particular).

When you're rock bottom you realize making excuses won't do you any good, you either do the things you have to do or you'll never change your situation. And you only fool yourself by not doing that, and why would you do that? It's your life.

I also had to fail a ton but ultimately managed to escape from that shitty reality. The real eye-opener is when you start making way more money than your family, and you realize it’s because you did the opposite of what they told you. It shows just how important it is to trust yourself instead of taking advice from people who aren't living the life you want.

It's called the greater fool concept.



Nowadays I believe the stock market is the least "scammy" as ever... why?

Two reasons:

1) Unprecedented globalization: Because unlike other decades prior, the world is now a global economy with major market companies being global, not just American. You buy Apple or Google or NVDA, you're buying a global corporation.

2) US Dollar inflation and deficit policy + reserve currency dangers: The dollar continues to erode in power. Buying assets in the form of stock is a great inflationary protector.

Given a choice, I'd rather own $10000 in QQQ or SPX than $10000 sitting in a bank. Over time, the latter is guaranteed to lose money. The former, not so much.



Not sure where you get that I hate the stock market. I have millions in the stock market. I also get paid passively every month in excess of 5 figures, more yearly than the average small company CEO makes. My "hate" comes from the "live poor, die rich" philosophy, as if time doesn't depreciate and is a commodity worth marginalizing in a frugality scheme until you're 60 or 70.

That is why put "hate" in quotes. You're right that it's slow, unless you're doing deals like Buffett, and even then... But some people might get the wrong idea and thow the baby out with the bathwater, when it comes to the stock market, as in, not use it at all, because it's "slow" to build wealth.

 

[thehawkman]

Not to mention the immense liquidity. Banks and Corporations are given low interest debt to basically buy back their own shares. LOL

Yeah, that's one neat trick. Usually when a company does that I follow suit. That means they can't think of any better use for their money than to use it to raise their stock price.

 

[RealDreams]

When your business stops making money and you only have $100k in the bank, you will wish you socked away 75% of the profits.

Also when you are 60, you will thank your 25 year old self for doing so.

Or would you rather be 60 and still working whether it be a job or still running a business?

There are many people on this forum that have made good money for many years. These same people are still broke in relation to being in the fastlane.

I agree, I changed my way of thinking since I originally made that post. I also managed to scale the biz to $60k net profit/month. It's easier to invest your money when you don't make the average salary, cause it's not as slow.

So now I have basically 80% of my net worth in the stock market. SRX8 for the most part, recently put some into VWRL cause it's time to build that paycheck pot. SRX8 is an accumulating ETF and I have around 230k there, I'm "only" 24 so I'll let it grow and compound, and from now on I am only investing in distributing ETFs cause I want to start getting that (actual) passive income.

This is something else that I had to unbrainwash myself from, the Reddit crowd says to just put your money into accumulating ETFs cause the re-invested dividends will compound alongside the growth, but again, they don't make fastlane income so for them it makes sense cause they rely 100% on compound interest for growth (or on a measly additional $1k a month), I rely on my business income and channel my profits in the stock market.

Personally, accumulating ETFs kind of feel like a scam because you're not getting paid shit until you sell, I remember reading in unscripted that your money should pay you in regular intervals and it should not be treated as a free loan (don't remember the exact wording).

Was also considering getting into real estate so didn't put all my liquidity into the stock market. Yes, it's not ideal to keep a lot of money in the bank but I still need to make up my mind on this.

But I haven't purchased any significant toy ever since my business started making money. Crossed around $500k in net profit a few weeks ago and the most expensive thing I bought was an 800$ suit. Want a supercar but I am not there yet.

 

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[biophase]

I agree, I changed my way of thinking since I originally made that post. I also managed to scale the biz to $60k net profit/month. It's easier to invest your money when you don't make the average salary, cause it's not as slow.

So now I have basically 80% of my net worth in the stock market. SRX8 for the most part, recently put some into VWRL cause it's time to build that paycheck pot. SRX8 is an accumulating ETF and I have around 230k there, I'm "only" 24 so I'll let it grow and compound, and from now on I am only investing in distributing ETFs cause I want to start getting that (actual) passive income.

This is something else that I had to unbrainwash myself from, the Reddit crowd says to just put your money into accumulating ETFs cause the re-invested dividends will compound alongside the growth, but again, they don't make fastlane income so for them it makes sense cause they rely 100% on compound interest for growth (or on a measly additional $1k a month), I rely on my business income and channel my profits in the stock market.

Personally, accumulating ETFs kind of feel like a scam because you're not getting paid shit until you sell, I remember reading in unscripted that your money should pay you in regular intervals and it should not be treated as a free loan (don't remember the exact wording).

Was also considering getting into real estate so didn't put all my liquidity into the stock market. Yes, it's not ideal to keep a lot of money in the bank but I still need to make up my mind on this.

But I haven't purchased any significant toy ever since my business started making money. Crossed around $500k in net profit a few weeks ago and the most expensive thing I bought was an 800$ suit. Want a supercar but I am not there yet.

Do you own a primary residence? Sound like that might be the next investment.

 

[RealDreams]

Do you own a primary residence? Sound like that might be the next investment.

Don't have any. That's why I am looking to buy an apartment. Trying to decide where to buy it (country). In Europe, price tends to vary a lot based on the country. I am currently in Eastern Europe but am considering moving to the Czech Republic, and prices are quite high there.

 

[PursueLiberty]

I have seen MJ(and others) recommend REIT’s instead of traditional Real Estate investing, in The Netherlands I know some companies which will give you a fixed %yield payed each month, they use your money to finance projects. These type of companies are probably active globally.

Might be more interesting if you don’t have any “trust” or interest in the stock market yet. I don’t have any experience with these whatsoever.

 

[ZCP]

need to determine your personal vision / with some advice from others (like the all weather portfolio) and create your own split of how to invest your profits.

some should definitely go into your current business if there are growth opportunities.
max out ira / 401k / roth ira stuff via your business
i put some into dividend stocks for future income.
some goes into new ventures / businesses
some i spend on making my family's life better

build your own ratios and review them quarterly and yearly. take some chips off the table!! key.

 

[MJ DeMarco]

I remember reading in unscripted that your money should pay you in regular intervals and it should not be treated as a free loan (don't remember the exact wording).

This is just my personal preference.

I want my money to earn rent.

Someone is using it, I want rent payments.

Of course, anyone can argue I'm leaving a tremendous amount of $$ on the table by taking lower returns in the 6-8% range versus standard index fund or stock investing.

What those people can't understand is they are aggressively investing for wealth. It is their only vehicle. And as such, they assume far more risk.

I'm passively investing for income and capital preservation. Less risk, but predictable income.

That said, I do own index ETFs and stocks (AMZN, NVDA, D, CRSP, NU to name a few) but the bulk of my capital is earning steady, recurring income via dividends, REITS, bonds, and tax-free municipals.

 

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[ZCP]

@MJ DeMarco this is AFTER you had the exit event. when you were on the come up, you put everything into the company, right? when did you transition and start taking something off the table?
same for @biophase ?

 

[MJ DeMarco]

@MJ DeMarco this is AFTER you had the exit event.

As I posted in my thread, this Capital Allocation was used at all times, and NOT after an exit event.

The exit event permanently wiped out the Emergency Fund and the Debt Repayment of this cycle.

 

[biophase]

@MJ DeMarco this is AFTER you had the exit event. when you were on the come up, you put everything into the company, right? when did you transition and start taking something off the table?
same for @biophase ?

Actually I did not. I invested in real estate. I had 3 rental properties before I even started my ecommerce business. I used my profits to buy more real estate every year. I did not reinvest much into my business. I was 80% invest, 20% reinvest.

My thought was that my business would eventually decline to nothing so I took money off the table each year. When I sold my first business I took 20% to start my current business and spent the other 80% on real estate.

I put $200k into my business in 2015 and have not put a dime into it since. I have taken out all the profits every year. This is why today my business is worth a small amount of my networth.

 

[biophase]

Actually I did not. I invested in real estate. I had 3 rental properties before I even started my ecommerce business. I used my profits to buy more real estate every year. I did not reinvest much into my business. I was 80% invest, 20% reinvest.

My thought was that my business would eventually decline to nothing so I took money off the table each year. When I sold my first business I took 20% to start my current business and spent the other 80% on real estate.

I put $200k into my business in 2015 and have not put a dime into it since. I have taken out all the profits every year. This is why today my business is worth a small amount of my networth.

Let me elaborate more on my thinking. So imagine that you are making $200,000 a year in your business. My thought was that the $200,000 a year could disappear at any time so I would take $100,000 and invest it each year. The other $50,000 I would use to live on. The last $50,000 went to taxes.

I now separated personal net worth and the business net worth. To me once I converted money from within my business to my personal money it became locked in as my money forever.

Money in my business could disappear at any given time due to an unforeseen event. If you are reinvesting your profits every year something like Covid could hit your business making it worth zero dollars. Now, all your hard earned money for the last 3 to 5 years is totally gone.

However my personal net worth money that I have extracted from my business, in my mind, would be safe from this business failure because it has been invested in something that is 100% independent of my business.

 

[Two Dog]

Personally, accumulating ETFs kind of feel like a scam because you're not getting paid shit until you sell.

@biophase is right about everything. All of it.

Your business is a job built upon your valuable time. Investment returns require almost no time.

For every successful entrepreneur who MJ'ed their life to leisure, I know several who either struggled forever or pissed it away thinking the good times would never end. Or they got divorced. Or they had a partner that screwed them over. Or the industry melted. Or a savvy competitor crushed them. Or lots of other life things happened. Similar things will happen to you.

If/when you cash out the business, that pile of cash sits doing nothing except depreciating over time like pretty much every retiree portfolio. Act 2 is investing/partnering/owning cash flowing investments to learn how to send off dollars to make friends and bring home more dollars. That's the TRUE definition of wealthy. Waiting until the cash pile appears before starting Act 2 makes it far more likely you'll mess it up when it matters and you have far more to lose.

Professional sports athletes earn more than 99.99% of the population in their day job. Short careers though. Most of them end up with average or below average wealth. It shouldn't take you more than ten minutes of research to understand why that happens.

 

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