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HOT TOPIC Should I invest in stock market if I am trying to start a fastlane business?

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thedragon

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I remember MJ saying in The Millionaire Fastlane that every dollar you save is like a soldier in your army that fights for your independence.

Then he also goes on to mention something about investing in the index and 7-8% growth rate (sorry if I am mixing things here).

Given this, I am confused if he means we should invest our extra dollars into the stock market while we are trying to start our Fastlane business?

The above statement sounds counter-intuitive to the idea of TMF where he kind of suggests that investing in the stock market won't get you rich and business and liquidation events are the way to get those millions of $. So I am probably mixing things here.

But I would appreciate it if anyone can clarify what that part really meant (I don't have the book with me).

And also, should I invest in the stock market at all if I am set on following Fastlane? What if I have multiple years of personal expenses in savings?
 

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Galacticum

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If I were in your shoes I wouldn't invest. I would use all the capital that I have to test out different business models, see which ones stick and then scale them. Cash is king and will allow you to move fast. And that's what you ultimately want.

Tying up your capital into the stock market is fine if you have an abundance of money laying around and don't need it for your biz growth.
 

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I like the stock market. I suggest doing it yourself though because otherwise there is little benefit to the investment relative to the risk involved.

There is NOTHING like being able to click and buy a piece of a company and then click to sell it in the same day.

The markets are very liquid and investing all of your money in your venture is stupid.
 

arl

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What I understood from the book and I already thought myself is that the stock market is a great tool to preserve wealth. Even grow it if you already have a nice amount saved.
But if you have a smallish amount of money it's better to use towards a fastlane project. If you put $ 100k in the stock market and you consistently get 10% returns every year (which is unlikely), you are just making $ 10k a year (pre-tax). It's not a bad return for a completely passive investment, but if you were to invest those $100k towards a fastlane business you could get a ROI of millions in a few years.
 

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Used well, the stock market is a great way to preserve wealth. But, as noted above, you'll need cash to get your Fastlane biz up and running. I'm not an all or nothing kind of person, so I'd go with some safe interest bearing stocks while holding on to at least twice what I think I'll need to get the biz going.
 

Benji90

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MJ suggests investing into municipal bonds etc when you've already gained massive wealth, he puts the figures in black and white in the book, theres no point investing 5k into a 4-6% interest rate because that's the slowlane, what you want is to put 10m in (after you sell your business, or are making huge amounts of income from your business) - 4% interest on 10m is a little over 30k a month (95% passive)

That's where you go from rich to wealthy - no one got wealthy putting $100 a month into an investment bond.

That's what I took from the book anyway.
 

thedragon

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Thanks for your replies @Galacticum @Kak @arl @Ernman. I agree with everything. Since I have surplus amount, investing some in the stock market is the way to go. And some can go in ultra short term funds so as to preserve wealth and be used in business when needed.

Also, I won't invest in the index. Most active funds here still outperform the index.

Cheers!
 
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ericaung

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Its simple actually. Better save and invest your salary while you are on slow slane. When you have some sort of financial security, you can start withdraw all of ur money and put it all onto fast lane.
 

Ernman

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MJ suggests investing into municipal bonds etc when you've already gained massive wealth, he puts the figures in black and white in the book, theres no point investing 5k into a 4-6% interest rate because that's the slowlane, what you want is to put 10m in (after you sell your business, or are making huge amounts of income from your business) - 4% interest on 10m is a little over 30k a month (95% passive)
spot on Benji90
 

Martzee

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I remember MJ saying in The Millionaire Fastlane that every dollar you save is like a soldier in your army that fights for your independence.

Then he also goes on to mention something about investing in the index and 7-8% growth rate (sorry if I am mixing things here).

Given this, I am confused if he means we should invest our extra dollars into the stock market while we are trying to start our Fastlane business?

The above statement sounds counter-intuitive to the idea of TMF where he kind of suggests that investing in the stock market won't get you rich and business and liquidation events are the way to get those millions of $. So I am probably mixing things here.

But I would appreciate it if anyone can clarify what that part really meant (I don't have the book with me).

And also, should I invest in the stock market at all if I am set on following Fastlane? What if I have multiple years of personal expenses in savings?
It depends. Are you planning to use a stock market as a wealth-building vehicle? Be active in managing the positions? Build a trading plan and execute it mercilessly? Monetize your positions? Or just plainly invest in a mutual fund or index fund (buy and hope)? If active management, yes. I have been on that path as I do not need any inventory, no need to deal with pissed off customers or people who hire you for your services and then do not listen to you, blame you for all the problems, and yell at you for their own stupidity, no need to rent an office (unless you want to), warehouses, employees, manufacturing, urging unpaid invoices, competing with hundreds of other "me too" contractors, designers, business owners... etc., I have been on both sides - a mechanical engineer, designing for people and a private investor/trader. And I can tell you, the freedom of trading vs. a job, or even business (unless your business is in the stage of it running on its own) or real estate investing, that freedom is absolutely sweet. But it also takes time to become successful in trading. Passive investing? No. Active management? Yes.
 

sparechange

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I like the stock market. I suggest doing it yourself though because otherwise there is little benefit to the investment relative to the risk involved.

There is NOTHING like being able to click and buy a piece of a company and then click to sell it in the same day.

The markets are very liquid and investing all of your money in your venture is stupid.

I disagree and you are 100% wrong.

What is a good return in the market? 5% ? 10%?

You can grow a business 9999999999% and having cash set aside is way more efficient that playing the wallstreet casino.
 
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Martzee

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I disagree and you are 100% wrong.

What is a good return in the market? 5% ? 10%?

You can grow a business 9999999999% and having cash set aside is way more efficient that playing the wallstreet casino.
You are looking at the market from a lame perspective. How can you claim someone being 100% wrong and not even knowing what the current average annual market returns are and just throwing some numbers around?

If you actively manage your investments, your returns can be a lot larger. Mine are in average 45% annually. Which business can provide such a profit margin year to year every year?
 

sparechange

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You are looking at the market from a lame perspective. How can you claim someone being 100% wrong and not even knowing what the current average annual market returns are and just throwing some numbers around?

If you actively manage your investments, your returns can be a lot larger. Mine are in average 45% annually. Which business can provide such a profit margin year to year every year?

Heck if I know, so at 45% you must be worth billions then? Comeon, advising someone to invest the stock market is insanity especially considering the fact they have no idea what they are doing (to the op)

The average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years. The S&P 500 has done slightly better than that, with an average annual return of 13.6%. However, the average return looks very different from year to year

Why do i feed trolls, hmmmmmm
 

Martzee

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Heck if I know, so at 45% you must be worth billions then? Comeon, advising someone to invest the stock market is insanity especially considering the fact they have no idea what they are doing (to the op)

The average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years. The S&P 500 has done slightly better than that, with an average annual return of 13.6%. However, the average return looks very different from year to year

Why do i feed trolls, hmmmmmm
If you think so... Let's get back in 5 years and discuss this all again...
 

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I think investing in the market has its place. But only after one has created a constant stream of income in the business that they created.
I wouldn't put the cart before the horse.
Develop a stream of income and then invest funds in what you are comfortable with, after doing your own DD.

The market has been very good to me this past year. But I am a bit of a speculator due to some discretionary funds.
Those funds came from profits.

Use your profits wisely and you have a 1-2 punch to build a greater legacy.
I'm in Biotech and have seen some massive returns....

Just my 2 cents.
 

Martzee

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Heck if I know, so at 45% you must be worth billions then? Comeon, advising someone to invest the stock market is insanity especially considering the fact they have no idea what they are doing (to the op)

The average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years. The S&P 500 has done slightly better than that, with an average annual return of 13.6%. However, the average return looks very different from year to year

Why do i feed trolls, hmmmmmm
People like you think that the stock market is to buy a mutual fund, or index, or even individual stocks and then hope that 50 years later they may make money. Not my case.
 

Michael Burgess

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If I were in your boat, I think I would:

1) Keep some cash liquid for security and peace of mind
2) Invest heavily in your own education; learn more about the business you intend to be in, or the vehicles you intend to invest in, before throwing money around
3) Use as little cash as possible to bootstrap a business

That's it. Good luck!
 

Black_Dragon43

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I remember MJ saying in The Millionaire Fastlane that every dollar you save is like a soldier in your army that fights for your independence.

Then he also goes on to mention something about investing in the index and 7-8% growth rate (sorry if I am mixing things here).

Given this, I am confused if he means we should invest our extra dollars into the stock market while we are trying to start our Fastlane business?

The above statement sounds counter-intuitive to the idea of TMF where he kind of suggests that investing in the stock market won't get you rich and business and liquidation events are the way to get those millions of $. So I am probably mixing things here.

But I would appreciate it if anyone can clarify what that part really meant (I don't have the book with me).

And also, should I invest in the stock market at all if I am set on following Fastlane? What if I have multiple years of personal expenses in savings?
Yes, the stock market can be fastlane for you, even if you don't have a lot of money. But you want to learn to trade with the right people. Look for DAY TRADERS - people who trade and take their wins every day, out of market volatility. There are day traders out there making $15K/day. If you do that day after day, it doesn't take long to make a lot of money.

The only difference between where you are and where they are is knowledge. If you're interested to go down this path, feel free to reach out to me and I can guide you to the right people, and then you can look into them.
 

Kid

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If I were in your shoes I wouldn't invest. I would use all the capital that I have to test out different business models, see which ones stick and then scale them. Cash is king and will allow you to move fast. And that's what you ultimately want.

Tying up your capital into the stock market is fine if you have an abundance of money laying around and don't need it for your biz growth.

There is one question and one notion for OP.
1) Can you turn your money (all of it) into business wisely without spending them on things that don't move the needle -> app for $50k, nice office and $10k logo?
If you can do it- avoid stock market. If you can do your biz on less money (going lean) definitely spend less on business and put rest in stocks.

2) Stock market is very liquid, like @Kak said, it even can be "same day" liquid. Only caveat is when you'll need cash and stock market will be at its bottom (like in 2000, 2008 and March this year).
 

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thechosen1

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There definitely comes a point where your savings will be more than what you need to spend on your business.
That being said, business accounts and personal accounts should be separate anyway.
I'd like to get an answer from MJ about this... I flipped a house for about $40k profit and dumped all of it at once into dividend-paying stocks... Way better than doing the $100/month frugality, but still nowhere near the big "sell your business" moment. That being said, with about the same amount still sitting in savings...why not?
 

Kevin88660

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If your business is not capital intensive, and you have quite some spare cash to invest-North of 100k?

It is misguided to think of all you have is 20k and you want to throw in 10k aiming for 4-7 percent return. It is useless.

Slow learners can afford to have a small emergency fund because they live predictable lives. If you are self-employed or have a business the amount of ideal liquidity buffer you should have is a lot higher.

Don’t bother investing unless you have more than 50k. The money is best served in the bank waiting for a future business opportunity or to save your business when in need.
 

ljean

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Stock market cant be beat for the liquidity. Once you figure out what you are doing it is good for cash management also - I have $300,000 margin loan out at 1.25%. Not going to get a rate like that anywhere else. But unless you have a lot of $$ in there its not really worth the time. It takes the same amount of effort to manage a $10,000 account as a $10,000,000 account.
 

thechosen1

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If your business is not capital intensive, and you have quite some spare cash to invest-North of 100k?

It is misguided to think of all you have is 20k and you want to throw in 10k aiming for 4-7 percent return. It is useless.

Slow learners can afford to have a small emergency fund because they live predictable lives. If you are self-employed or have a business the amount of ideal liquidity buffer you should have is a lot higher.

Don’t bother investing unless you have more than 50k. The money is best served in the bank waiting for a future business opportunity or to save your business when in need.
Stock market cant be beat for the liquidity. Once you figure out what you are doing it is good for cash management also - I have $300,000 margin loan out at 1.25%. Not going to get a rate like that anywhere else. But unless you have a lot of $$ in there its not really worth the time. It takes the same amount of effort to manage a $10,000 account as a $10,000,000 account.
Okay so let's say I have $100k. Stock market...yay or nay?

Could also invest in real estate with leverage...that's more of a business rental system, right?

Like I said, looking for the TMF / Unscripted meta for this. I believe the advice would to to reinvest in your business, but thoughts...?
 

ljean

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There is no right answer, you need to figure out where YOU can grow it the fastest.
 

MJ DeMarco

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Reinvest in your business first as a CENTS based business offers greater returns than stocks.
If there is surplus capital, I invest in dividend paying stocks, or REITs, or instruments that give a payment for capital rental.

The end goal here, both for my business and investments, is to get paid passively with the passage of time.

If you think about it, ownership shares in a dividend paying company will pay you passive income... FOR LIFE. While 4% might not be a lot, it is if we're talking thousands of shares.

Our objective is to be FREE ... the quickest means to obtain that freedom is a business. And when the day comes when you don't have (or don't want) a business, you have the latter to leverage.
 

Sethamus

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Okay so let's say I have $100k. Stock market...yay or nay?

Could also invest in real estate with leverage...that's more of a business rental system, right?

Like I said, looking for the TMF / Unscripted meta for this. I believe the advice would to to reinvest in your business, but thoughts...?
This is up to you and your goals.

Have a business idea to execute on right now? Then keep startup cost + extra in account. The rest utilize it where you can make something off of it. Stock market, real estate, etc. depending on the liquidity you need.

I have money set aside directly for a business (probably more than I need), I own real estate which takes up no time and the money is not as liquid. I also am in the market, but not on the day trade level currently. So it takes up some time though not a lot and is accessible to pull out so long as I don't lose it.

I make money in both that I wouldn't be if it was just sitting in a bank and would sell them to 10x a business if needed. Each takes little time once you are in them. The education has taken up a lot of my time through the years though. If you have zero knowledge then decide how much time you have to learn one and start there. Just don't let it take away from your business. I want to do options and believe I can learn it, but it would take away from the time I need to focus on a business. So it is on the back burner for now.
 

daniel_m

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Any money you do not need to invest into your own business/ventures and lifestyle, should probably go into the market. Really no reason to keep huge sums of money in your bank account if you know you won't be needing most of it. Risk is mostly minimal if you are diversified.

Though I don't know if it's the best time to invest right now, since we're approaching a critical election and the markets are near an ATH.
 

MJ DeMarco

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Over the past 30 years, my businesses have enjoyed 200, 300, 1000% returns.
Over the past 30 years, the stock market has enjoyed 8% returns.

The choice is clear if an investment in your business can deliver growth.

If not, invest in solid companies that pay dividends. Or, just buy the QQQ, SPY, or some index fund.
 

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