You can’t make money in the stock market if you don’t have money to begin with. So the first step in any stock investing plan is to figure out how you are going to get that money to invest. In the investing world we call this capital.
You can make money to invest a number of different ways. For most people, it will be their jobs or starting a business.
For example, my old boss started his own business on the side. It’s a restaurant and catering scheduling company called Kalloop. He’s no longer working in the corporate world and is doing Kalloop full time.
You should focus on making more money in your career or consider starting a business. In fact, it makes a lot more financial sense to invest in your own earning power than to spend time trying to find stocks to buy or learning how to invest in stocks.
How I Started a Home Based Business and Got a 600% Return!
Instead of giving you some hypothetical situation, let me give you an example from my own life. I have a few extra hours a week to spend on making money, other than my day job doing sales for a software company.
When I first started to think about how to make money, I had a decision to make. I could spend those few hours to learn about investing money in the stock market or I could spend it starting a home based business.
After doing a ton of research, I found a place called The Keyword Academy that taught me how to make money by starting an internet marketing business. It was really the only legitimate program that I found that wasn’t a scam. It’s not a get rich quick scheme. Their business model actually takes a lot of time and effort, but you can do it in just a few hours a week and make extra money.
ROI on Starting an Online Business
I had about a couple of hundred dollars a month I could put toward either one. To keep this simple, let’s say I had $2,500 a year to invest. I can invest it in stocks or start a business.
Even if I were able to make a 20% return on that money in the first year, I would have made only $500. If you know anything about investing in stocks, you know that 20% is not easy. Most mutual fund managers can’t get 20% a year.
In addition to the capital investment, I would have to spend a ton of time learning about stocks and how to invest. Again, there is opportunity cost here. That would be time that I could spend on building a business.
Making Money to Invest
I decided to start a home based business that would generate the capital I would need to invest. I took the $200 a month and invested in starting an internet marketing business. I also took the time I would have spent in learning about investing in the stock market and learned how to start an online business instead.
Making $1,200 a Month
Now I am making around $1,200 a month with my online business. I am still investing about $200 a month into this business as well as a lot of hard work and effort.
Return on Investment – 600% Return
Now, instead of only making $500 a year from my investment of $2,500 and time, I am making $14,400. Now, instead of just having $500 a year more to invest in stocks, I have almost $15,000 more I can use to invest in stocks. Does this make sense?
Building a Business
The great part about this is that it’s not a static $1,200 a month. It is growing every month. I’m not just doing a job, I’m building a business. That $1,200 is semi-passive income. I say ‘passive’ because I could do nothing next month and probably still make that much. I say ‘semi’ because I do need to do upkeep to keep that amount coming in.
But the great thing about this is that I can build on it. If I can make $1,200 a month, that means I can make $2,000 a month. If I can make $2,000 a month, then I can make $5,000 a month. If I can make $5,000 a month, there is no reason I couldn’t make $10,000 a month.
Building Capital to Invest in Stocks
Now I am building up capital that I can use to invest in stocks. But my initial investment and time was worth a lot more for me in starting a business rather than going straight into the stock market.
I had won the lottery or got a big inheritance, sure, I could go right away into investing in the stock market. But short of that, I need to build up capital in order to make a decent amount of money in stocks.