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Old 08-16-2010, 08:27 PM
 
41 posts, read 109,630 times
Reputation: 42

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Hello,

I am a 31 year old man with a somewhat entrepreneurial spirit, that is trying to build financial independence and prosperity outside the traditional corporate professional world. I am at the crossroads of making a decision regarding the route I shall take. I am considering real state, traditional entrepreneurship, and stock/futures trading. Millionaires as well as moderately affluent people do exist in all three of these fields.

From your experience, I am wondering the following:

1. Of these three paths ( Real Estate, Traditional Entrepreneurship, and trading) which one has the best return on effort, time and money?

2. Which one of these three paths has the best chance of success?

3. From your experience, what are the different personality traits and skills required to thrive in each of these three paths?

Any insights or thoughts would be tremendously appreciated.

Thanks
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Old 08-17-2010, 04:49 AM
 
3,853 posts, read 11,420,846 times
Reputation: 2503
Spent alot of time thinking of this as well. I think the best route is the one that can provide passive income streams with low risk. You have to make sure to factor in applicable tax laws otherwise such failure can severely erode your wealth over time.

1. Real estate - This area does have the ability to provide passive income but requires a significant amount of capital to acquire property. As a result, its more oriented towards the wealthier persons. Focus on buying real estate based on what it can produce, what it can be leased for, what it can be rented for.

2. Entrepreneur - This area has the greatest potential gain but also highest risks. Your idea could grow into the next billion dollar company or like 70% of first year companies, a failure.

3. Trading - If you are referring to day trading then this is surely not the way to wealth. Capital gains on such trades is high. Instead you should focus on investing for the long term. Do your own research and buy individual stocks (NOT MUTUAL FUNDS, fees too high).

So which one is best? All of them. Save up, buy a small apartment or farm land and make some money from it. If you have a good business idea then make it a reality! When you have some saved money do some research and select some wise investments. There is one thing for certain. Most of the wealthy have made all their wealth from investing and business.

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Old 08-17-2010, 07:51 AM
 
3,698 posts, read 9,982,342 times
Reputation: 2593
Follow the path that interests you the most. You aren't going to maximize your earning potential unless you have a passion for what you are doing.
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Old 08-17-2010, 07:58 AM
 
Location: southern california
55,237 posts, read 72,392,137 times
Reputation: 47449
building wealth requires a steady good income. i assume you are thinking of starting from the bottom.
learn a trade, electrician, plumber, nurse so forth, not massage therapist. dont go in debt learning -it and work hard. invest in real estate- small property fix er ups only, that will be your moonlight job. keep at your trade. work hard. . never buy property from banks, they are thieves and will sell you bad property w/o disclosure, thanks to new repo laws. do not "leverage" never buy anything w/o the clear intention of paying it off in a short time.
deflation will not go away soon.
avoid debt.
dont marry.
dont get into the manipulation business, those people will perish and soon.
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Old 08-17-2010, 09:18 AM
 
28,383 posts, read 67,903,744 times
Reputation: 18188
Default Timeline / horizon need to be considered too...

I tend to agree with the folks that say " try em all" to some extent, but I feel that it is necessary to be very realistic / clear headed too.

I know many people that have had the right ideas at the wrong time and not benefitted as much though that were fortunate enough to have a strategy that fit the times.

Folks that stuck with " ever increasing real estate mindset" for too long are likely wiped out now. Similarly folks that had dreams of day trading their way to an early retirement are now mostly still dreaming. Performing a valuable service or selling a desirable / necessary product also shift dramatically. Many such businesses are far more susceptible to forces outside the control of the business owner than most acknowledge.

Without sounding too pessimistic I think the most valuable skill one can cultivate is knowing what " won't work". Being unemotional about cutting loses or not regretting "missed opportunity" seem to be among the most uncommon of skills that allow the successful folks to bounce back / move forward while others get mired in problems . I think you have to be able to learn from others, sort out what is true, and not focuse too much on trying to uncover some "secret formula".

If you have a solid job with good income you need tp be realistic about moving away from that for some "fantasy". Owning enough real estate to solely generate either cash-flow or appreciation to replace a middle class lifestyle is cry time consuming. Similarly every business owner I have ever met tells me the difference between success and disaster is a razor thin line that requires near constanct vigilance. I am also fortunate to know a handful of real-deal financial markets traders, the success they have is littered with long hours, high stakes risks backed by incomplete knowledge and a sort of ticking bomb mindset that forces the survirors into tow very different cam ors -- those that live a hair's breadth away from ruin with ease and those that swept profits off the table into safe keeping with a religious devotion. Of course yiu needn't do either if you have broader skills to draw on, but like a linebacker that has a hobby of being a jockey the combination of is so rare as to be unheard of...

The OP does not mention what their current occupation is, or if they have dabbled in all three of these areas. My gut says there is no reason to "shut the door" to two of the paths, depending on what level of involvement they already have the commitment to diversifactiob is different than being unfocused -- if each of these are looked at not as a single right way, but as facets that suit some people better than others it is logical that one's own apptititudes and traits will shine in one area more than others...
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Old 08-17-2010, 08:03 PM
 
41 posts, read 109,630 times
Reputation: 42
Quote:
Originally Posted by chet everett View Post
I tend to agree with the folks that say " try em all" to some extent, but I feel that it is necessary to be very realistic / clear headed too.

I know many people that have had the right ideas at the wrong time and not benefitted as much though that were fortunate enough to have a strategy that fit the times.

Folks that stuck with " ever increasing real estate mindset" for too long are likely wiped out now. Similarly folks that had dreams of day trading their way to an early retirement are now mostly still dreaming. Performing a valuable service or selling a desirable / necessary product also shift dramatically. Many such businesses are far more susceptible to forces outside the control of the business owner than most acknowledge.

Without sounding too pessimistic I think the most valuable skill one can cultivate is knowing what " won't work". Being unemotional about cutting loses or not regretting "missed opportunity" seem to be among the most uncommon of skills that allow the successful folks to bounce back / move forward while others get mired in problems . I think you have to be able to learn from others, sort out what is true, and not focuse too much on trying to uncover some "secret formula".

If you have a solid job with good income you need tp be realistic about moving away from that for some "fantasy". Owning enough real estate to solely generate either cash-flow or appreciation to replace a middle class lifestyle is cry time consuming. Similarly every business owner I have ever met tells me the difference between success and disaster is a razor thin line that requires near constanct vigilance. I am also fortunate to know a handful of real-deal financial markets traders, the success they have is littered with long hours, high stakes risks backed by incomplete knowledge and a sort of ticking bomb mindset that forces the survirors into tow very different cam ors -- those that live a hair's breadth away from ruin with ease and those that swept profits off the table into safe keeping with a religious devotion. Of course yiu needn't do either if you have broader skills to draw on, but like a linebacker that has a hobby of being a jockey the combination of is so rare as to be unheard of...

The OP does not mention what their current occupation is, or if they have dabbled in all three of these areas. My gut says there is no reason to "shut the door" to two of the paths, depending on what level of involvement they already have the commitment to diversifactiob is different than being unfocused -- if each of these are looked at not as a single right way, but as facets that suit some people better than others it is logical that one's own apptititudes and traits will shine in one area more than others...
Yes, right now I am what most "Tea Partiers hate" a Government employee!!

No, this will not be a political rant. I am a believer in Nassims Taleb's Barbell strategy, which combines a very conservative form of profit making with some speculation. For example, putting 90 percent in T bills and 10 percent in venture capital.

Buy working harder than many people in my agency, I have managed to get into quite a secure position where I am virtually safe for a very long time. Additionally, I have health insurance and a pension plan. So as long as I don't do anything actually stupid at my job like not do my work at my job, look at online porn all day long, or curse out my manager I have a safe income like clockwork with the potential for promotions. However, as a government employee in my system, I will be unable to ever afford a really nice condominium, a second vacation home etc. Since I have a hour lunch break, two 15 minute breaks a day and never am expected to work on evenings and weekends, I have much spare time. I have no shot of ever getting a high paying corporate job, since I am not the corporate type. Additionally, what corporation would hire for a management program a 31 year old government employee with an unrelated graduate degree. My best bet for wealth is to some moonlighting activity. While it is not the most common, I have heard of some people who kept their regular day job, for steady income, while engaging in an outside venture for wealth. For example, Thomas Stanley of the "Millionaire Mind" described a bus driver who made millions with Long Term Stock Investing, a auto mechanic who made millions in real estate. My plan is to keep my day job and get rich on the side.

Here are my thoughts on the paths:

1. Real Estate: Know that some people did keep their days jobs and get rich in real estate, but never tried it.

2. Stocks: Once made some money via long term investing in high tech stock. However, the reason why I made it was because I happened know the founder CEO years before he became rich and famous. I bought a tiny amount and made enough to do some traveling years ago. I happen to have a good friend who made much money using a short trading system shorting stuff in Asia and Europe during the 2008 crash. I can either do long term position holding or graveyard shift daytrade Asian markets.

3. Entreprenuer: Here are some possibilities:


A. I have an innovative idea for a way that the function I perform in my agency could be handled in a much more efficient and productive way for many similar agencies across the country. I will have to speak to some people above me since there may be a conflict of interest, but I may want to be a service provider contractor, performing my function in an innovative way for several other agencies.Since this is a service business it requires just a computer and spare time and workers can be added after contracts are obtained.

B. Since I have some web marketing experience from years ago, work with a female relative to help market her unique idea for an ethnic cosmetic. I would work every spare moment on the business and only leave my day job if I made at least 4 times my current annual income.

C. A niche idea for an investment newsletter. I would do all work during spare time.

Since, I lack the ability to ever get a high paying corporate job, my strategy for success is to work during the day at my 9 to 5 goverrnment job ( which has flexible hours in case something unusual comes up), and in my spare time try to make it big in one of the ways mentioned above.

Thanks,
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Old 08-17-2010, 08:46 PM
 
Location: Los Angeles, Ca
2,884 posts, read 5,037,706 times
Reputation: 2725
I've studied 2 out of the 3 pretty well.

-I think it's as important to know what *NOT* to do, as what to do on your path to building wealth. Avoiding mistakes can make you money.

If you avoided real estate in 2005 or 2006 to 08, you made more money than a well prepared real estate investor who bought and sold at a lose. This is a very important point. Warren Buffett is famous for his first few rules...don't lose money. Rule #2, don't lose money.

I haven't been in stocks (like the S&P 500 index) at all since 99, 2000. You would have lost about 200 points in the S&P over the last 11 years.

The trick with the 3 is to read up, pick your spots (that you know well), then have the conviction to hold on. Entreprenuership probably takes the most time out of the 3. The myth of having to build a huge company is way overblown IMO. It's not for 95% of people. Plenty of 1 man businesses, 5 person businesses that can make money. There are so many little niches to get into. I would study marketing, sales.

With stocks and trading, get familiar with the main themes. Some people get almost religiously attached to a "label". Like they're a "value investor". Or they're a "gold bug". You can cling to an investment irrationally, that will end up costing you in the long run. Because of opportunity cost. Instead of clinging to that "value investing" moniker, more money could be made elsewhere.

I think many businesses (and franchises), and as a corollary (their investments, stocks, bonds) are subject to forces outside of the control of the business owner. Much like in sailing. The wind can be more powerful (and more persuasive) than the best of sailors. People fool themselves all the time, thinking *they're in control* and they know what makes something go up and down. And all you have to do is get on at the right time and off at the right time (like getting on and off an elevator) to succeed.

Look at the Hannah Montana craze. Lots of businesses are affected by that. Why is Hannah Montana a star, and not somebody else? Why did she take off like a craze? Whether you're Disney, or a t shirt salesman at a concert, or someone trying to make money selling a licensed Hannah Montana product, its really kind of a gamble. I think you're carried by the Hannah Montana winds, and not necessarily your own entrepreneurial skill. You might be more skilled at making a t shirt faster, cheaper, better than someone else. But the underlying crux of the craze you don't have control over. I think thats true in lots of areas.

I would read great books. I think Jim Rogers (financial commentator, former hedge fund manager with george soros in the 70's) is great. Charlie Mungers book is great (warren buffett's partner).

Be able to think for yourself and figure out what won't work. There's a quote by Munger (on the idea of avoiding loss), "Just tell me where I'm going to die, and I won't go there". Or something like that. Basically by figuring out what you want to avoid, that gets you to where you want to be.

Another good quote (from another author I follow), "In the land of the blind, the one eyed man is king". You don't necessarily have to be a genius in the land of the blind to succeed.

-I think personality traits are sort of overblown. Maybe the company selling you personality tests (for entrepreneurship) is winning. But a lot of figures from the past didn't have to take tests or quizzes to see if they had what it took. The ability to think independently and arrive at your own conclusions is valuable in all 3. And study people that are successful, and see what their traits are.
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Old 08-19-2010, 06:35 AM
 
3,853 posts, read 11,420,846 times
Reputation: 2503
Quote:
Originally Posted by Huckleberry3911948 View Post
building wealth requires a steady good income. i assume you are thinking of starting from the bottom.
learn a trade, electrician, plumber, nurse so forth, not massage therapist. dont go in debt learning -it and work hard. invest in real estate- small property fix er ups only, that will be your moonlight job. keep at your trade. work hard. . never buy property from banks, they are thieves and will sell you bad property w/o disclosure, thanks to new repo laws. do not "leverage" never buy anything w/o the clear intention of paying it off in a short time.
deflation will not go away soon.
avoid debt.
dont marry.
dont get into the manipulation business, those people will perish and soon.
good advice there brother.
Quick reply to this message
 
Old 08-19-2010, 11:09 AM
 
4,182 posts, read 5,657,999 times
Reputation: 1719
Quote:
Originally Posted by Robertwiz View Post
Yes, right now I am what most "Tea Partiers hate" a Government employee!!

No, this will not be a political rant. I am a believer in Nassims Taleb's Barbell strategy, which combines a very conservative form of profit making with some speculation. For example, putting 90 percent in T bills and 10 percent in venture capital.

Buy working harder than many people in my agency, I have managed to get into quite a secure position where I am virtually safe for a very long time. Additionally, I have health insurance and a pension plan. So as long as I don't do anything actually stupid at my job like not do my work at my job, look at online porn all day long, or curse out my manager I have a safe income like clockwork with the potential for promotions. However, as a government employee in my system, I will be unable to ever afford a really nice condominium, a second vacation home etc. Since I have a hour lunch break, two 15 minute breaks a day and never am expected to work on evenings and weekends, I have much spare time. I have no shot of ever getting a high paying corporate job, since I am not the corporate type. Additionally, what corporation would hire for a management program a 31 year old government employee with an unrelated graduate degree. My best bet for wealth is to some moonlighting activity. While it is not the most common, I have heard of some people who kept their regular day job, for steady income, while engaging in an outside venture for wealth. For example, Thomas Stanley of the "Millionaire Mind" described a bus driver who made millions with Long Term Stock Investing, a auto mechanic who made millions in real estate. My plan is to keep my day job and get rich on the side.

Here are my thoughts on the paths:

1. Real Estate: Know that some people did keep their days jobs and get rich in real estate, but never tried it.

2. Stocks: Once made some money via long term investing in high tech stock. However, the reason why I made it was because I happened know the founder CEO years before he became rich and famous. I bought a tiny amount and made enough to do some traveling years ago. I happen to have a good friend who made much money using a short trading system shorting stuff in Asia and Europe during the 2008 crash. I can either do long term position holding or graveyard shift daytrade Asian markets.

3. Entreprenuer: Here are some possibilities:


A. I have an innovative idea for a way that the function I perform in my agency could be handled in a much more efficient and productive way for many similar agencies across the country. I will have to speak to some people above me since there may be a conflict of interest, but I may want to be a service provider contractor, performing my function in an innovative way for several other agencies.Since this is a service business it requires just a computer and spare time and workers can be added after contracts are obtained.

B. Since I have some web marketing experience from years ago, work with a female relative to help market her unique idea for an ethnic cosmetic. I would work every spare moment on the business and only leave my day job if I made at least 4 times my current annual income.

C. A niche idea for an investment newsletter. I would do all work during spare time.

Since, I lack the ability to ever get a high paying corporate job, my strategy for success is to work during the day at my 9 to 5 goverrnment job ( which has flexible hours in case something unusual comes up), and in my spare time try to make it big in one of the ways mentioned above.

Thanks,
Don't forget to factor in your human capital in this equation. Check out the work of Prof. Moshe Milevsky on this. His book "Are You a Stock or a Bond?" explains this concept very well. If you work in a stable industry in a stable occupation with a stable income and employment security (eg a tenured professor, or a government worker like yourself who has a good pension and health insurance), then you can consider yourself a bond for asset allocation purposes. You can therefore afford to be more aggressive with the rest of your portfolio (eg invest in stocks on margin, maybe dabble in a side businesss, etc).

But if you work in a risky occupation with high incomes but in an economically cyclical industry (eg in the finance sector, or a start-up tech company, or a small business owner), you should consider yourself a stock. The rest of your portfolio should therefore be invested in more conservative assets (bonds, cash).

By taking into account your human capital in investing decisions, you balance your risks in a wholistic fashion.
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Old 08-19-2010, 12:09 PM
 
10,963 posts, read 7,755,416 times
Reputation: 3113
Quote:
Originally Posted by Robertwiz View Post
Hello,

I am a 31 year old man with a somewhat entrepreneurial spirit, that is trying to build financial independence and prosperity outside the traditional corporate professional world. I am at the crossroads of making a decision regarding the route I shall take. I am considering real state, traditional entrepreneurship, and stock/futures trading. Millionaires as well as moderately affluent people do exist in all three of these fields.

From your experience, I am wondering the following:

1. Of these three paths ( Real Estate, Traditional Entrepreneurship, and trading) which one has the best return on effort, time and money?

2. Which one of these three paths has the best chance of success?

3. From your experience, what are the different personality traits and skills required to thrive in each of these three paths?

Any insights or thoughts would be tremendously appreciated.

Thanks
With any of the paths you mentioned you are going to make mistakes starting out. I don't care how many books you read of seminar you attend. It's part of the learning experience. Part of that learning experience is going to involve losing money. It’s a big fear people have and the single biggest reason more people don’t work for themselves. However once you been through and survived the learning experience even if it results in failure you will be a much better person for the experience.

I think the key to being successful is to take a careful assessment of YOUR strengths and weaknesses and combine with your passion and aspirations. Then match the capital and game plan for WHAT WORKS BEST FOR YOU.

One more word of advice; the more preparation and time you put into having a business plan or trading strategy the likely it is to succeed.
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