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

[MJ DeMarco]

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.

 

[Kak]

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.

 

[MJ DeMarco]

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.

 

[arl]

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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[thedragon]

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]

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.

 

[Benji90]

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.

 

[Here]

If you have money you’re not using, invest it. If you need it, then don’t.

 

[million$$$smile]

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.

 

[Kid]

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).

 

[Kevin88660]

Let's say it takes a week of full-time effort for you to educate yourself about the situation and invest $100k, and miraculously you get a 5% return without any risk. That is, given that the risk-free rate is zero in both the U.S. and in Europe.

Then this extra $5,000 is earned in 40 hours of effort. If you can make over $100/hour in other ways, it is probably better not to bother with investment. Unless, for example, you want to learn from the experience, or unless you have studied markets for many years and are capitalizing on this knowledge.

No one I know got rich playing stocks. -Jack Ma

 

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[P3HSB]

One summary of this is quite on point: as an stock picker you have same chance of choosing right stock as a monkey throwing dart at list.

The only thing that differs monkey from you is that monkey doesn't think it knows what it does.

there are tons of people consistently beating the market year after year without being a daytrader. You just have to know where the future is heading

 

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[Black_Dragon43]

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.

 

[FierceRacoon]

Let's say it takes a week of full-time effort for you to educate yourself about the situation and invest $100k, and miraculously you get a 5% return without any risk. That is, given that the risk-free rate is zero in both the U.S. and in Europe.

Then this extra $5,000 is earned in 40 hours of effort. If you can make over $100/hour in other ways, it is probably better not to bother with investment. Unless, for example, you want to learn from the experience, or unless you have studied markets for many years and are capitalizing on this knowledge.

 

[ljean]

ill drop some gems here,

if done correctly, buying individual stocks can yield a significantly higher return than an index fund. In some cases, can even be better than starting a fastlane business

Stocks in the growth tech sector are seeing gains as high as 1000%+

For example, people who purchases $TSLA around March. If you had put in 20k in $TSLA pre stock split and held, you would of been up a cool $100,000+ in around 4 months

This is not a fair way of looking at it. Anyone can find numerous stocks that went up 5x in the last few months. Its a bit more difficult to select the ones that will go up 5x in the next few months.

 

[Kevin88660]

And yet... there are day traders out there who make $15K/day, and do so on a consistent basis. For them, it is a full-time job. Looking at the news, looking at technical indicators, 3 monitors opened, trading the most active/volatile stocks, and so on. It's not something that most people would have the patience and dedication/concentration to do, but it does exist.

Also, a lot of this has to do with knowing how to do it successfully. If you trade with brokers like E*Trade, Robinhood etc., you're screwed even before you make your first trade. They don't even give you real-time market data and what companies like these often do is that they sell your order flow to the market-maker who lifts the bid/ask prices before executing your trade, thus entering you at a massive loss already... of course, on "$0 commissions" lol

So if you're smart, you know how to set yourself up so you don't start at a disadvantage, and so on, then you can profit. But it is hard, like anything else.

The word “consistent“ in day trading is a big question mark. 95 percent of the supposed consistency are either “trust me Bro” or “course selling gimmick”.

Math and Computing PHD work in teams to grind out 10-15 percent audited return annually. And you see “one man show” trader who claims they can double their account assets in a year using charts.

 

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[Kid]

For some of you who aren't reluctant to losing money, I'll say don't lose your time.

If you want to know what this claim is based on, then well, its research findings that active trading funds overall lose money or underperform compared to index funds.

One summary of this is quite on point: as an stock picker you have same chance of choosing right stock as a monkey throwing dart at list.

The only thing that differs monkey from you is that monkey doesn't think it knows what it does.

 

[Guest-5ty5s4]

For some of you who aren't reluctant to losing money, I'll say don't lose your time.

If you want to know what this claim is based on, then well, its research findings that active trading funds overall lose money or underperform compared to index funds.

One summary of this is quite on point: as an stock picker you have same chance of choosing right stock as a monkey throwing dart at list.

The only thing that differs monkey from you is that monkey doesn't think it knows what it does.

To be honest you can just pull up a list of the S&P 500 companies, with weights, and easily buy shares in the main ones that don’t suck and ignore the other ~400. But yeah VOO, SPY and QQQ are good too.

the top 10 companies are most of the movement of the entire index anyway.

reinvested dividends account for a large portion of growth, too. Commissions can hurt over decades.

anyway, I’m sticking with what MJ says about making your money outside of the market and investing lump sums for income, not using passive investments for growth.

 

[Ernman]

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.

 

[Ernman]

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

 

[Get Right]

Which one has the higher return?

 

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[Martzee]

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?

 

[Martzee]

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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[Martzee]

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]

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!

 

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[Sethamus]

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.

 

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[daniel_m]

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.

 

[P3HSB]

The only good posts are from MJ himself... lol

ill drop some gems here,

if done correctly, buying individual stocks can yield a significantly higher return than an index fund. In some cases, can even be better than starting a fastlane business

Stocks in the growth tech sector are seeing gains as high as 1000%+

For example, people who purchases $TSLA around March. If you had put in 20k in $TSLA pre stock split and held, you would of been up a cool $100,000+ in around 4 months

 

[Black_Dragon43]

The part I question about consistency because unless you operate as a team and trade other people’s money, you do not have the arsenals to compete these days.

On the contrary my friend... As a team, you need to pay for everyone on the team, and likely are managing more than just your funds. This limits the stocks you even look at. For example, stocks that have low volume may be blowing up, and you may successfully be able to get returns on them with 50K... but you can't get returns out of it with 1M because the volume/liquidity simply is not there. So you skip it... You could choose to trade with just 50K, but that is time that the rest of your 1M sits unused... You need to find opportunities that you can trade with 1M to make the most out of your money.

So you don't have to compete with those guys... You can choose to trade something where they're not even competing with you, simply because it doesn't make sense for them to spend their time competing there.

Profitable strategies get eroded over time as others discover it so there is Constant pressure to discover new strategies and backtest them.

Yes, this is true, as far as I have noticed and spoke to people. And then there's the algorithms of the market makers which often trade against you.

When you are dealing with stocks and commodities, highly liquid things to trade, there is enough market liquidity to absorb your order without giving you a bad price, there is little difference trading a 10k account vs a 20 million account these days. They are both too small to make an impact. There are a lot of small teams operation in 8 digits fund sizes these days.

This is not true - it depends what you trade. Maybe I have a pattern which gives me an edge in a penny stocks, but not in AAPL. For smaller traders, who trade as individuals, there are often MUCH bigger profits to be made out of stocks which have enough liquidity for their size, but not so much so as to attract the larger institutional traders.

The problem is that this doesn't scale. I might be able to make 100% every day on $100. But the moment I try to make it with $1,000, it breaks, and I lose money, or make just 10% on it...

So there are different opportunities that you need to be looking at based on how much money you're trading with. The 100M+ institutional investors wouldn't even GLANCE at these high percentage opportunities, because they work only on low volume.

It's like this in all businesses really... when you first start out, you'll go for the opportunities that the bigger fish are ignoring, because it's not worth their time. When you conquer them, you scale to the next thing. And so on.

So as you make more money, obviously you scale your operation, and you start getting a team, and doing some of the things they're doing, etc. You eventually move towards building a business out of it.

I would say that if someone can work alone and achieve consistent quarterly profit and make one million dollar across all different market cycles, he has the capability to make 20 million. Trading for a living today is 20x harder than creating real value to real customers.

I agree, it is very hard and not suitable to all personality types anyway.

 

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[Think Expand]

Wow! @MJ DeMarco You've just distilled years of wisdom into a simple word of advice. Possibly, this is could be the whole Fastlane Book summarized in this reply!

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.