What do rich people do?
They pick a skill or business, master it, grind it to success, earn a lot and then invest more in profit-returning resources to keep their handsome earning cycle moving.
Right? Every rich person does this process.
People keep finding the right business idea or skill to achieve success, name and of course a lot of money too.
Have you ever wondered if investing can be a side hustle to make money? Can investing be a business? Can making money by investing be possible?
Like other businesses or main sources of income, can it be your primary source of earning money?
The answer to these queries is an absolute YES.
Of course, you need a good amount of money first to invest otherwise how a Jurassic Park movie will be crafted if there is no Steven Spielberg?
But wait!
This Yes, comes with some conditions/rules and criteria. If not fulfilled, Yes must be considered a BIG NO.
How is that going to happen and what would it take to make investing as a business we are going to find it in this article.
Let’s dive in.
Can Investing Be A Side Hustle?
To answer this let’s first remind ourselves what is exactly an investing.
An investment often refers to putting money into an asset with the aim/intention to generate new income or profits.
In financial terms, investing refers to buying land, property, business, stocks or funds as a whole or in percentage.
On the other hand, a side hustle describes work performed to earn extra income in addition to your primary source of income or full-time job.
Many Rich people in between their journey to success do side hustle to make their dreams come true.
Now let’s get back to the topic.
When the first camera was built in 1816 by Frenchman Joseph Nicephore Niepce. It took almost 8 hours to take a single very first photo popular as “View From the Window at Le Gras.”
When the first major computer ENIAC was built it occupied almost 1500 to 1800 sq feet area of a basement in a school.
What does it mean by these two ancient facts of the human race?
It means an incremental growth. A growth with consistency for steady improvements to increase value or worth in your existing efforts/work.
Yes, Investing can be a side hustle like other fields. You can opt for it as a side business, part-time job or full-time business.
But,
One must be willing to learn every day regularly and understand/practice the power of compounding if one decides to jump into this area.
You need to learn and grow a lot. To invest successfully in the stock market and make enough money to reward you, just as a full-time job would.
Stock Investment as A Business
Investing in stock is also an effective investment tool aiming for profits or income. In this article, investing as a business or side hustle refers to investing in the stock market.
In the stock market, you invest either in equity {shares} or in debt {funds or loans}. In equity again you have two options to invest stock investment and stock trading.
Like most things related to the stock markets, stock investing, unlike stock trading, is a long-term practice. You trade often, but you stay invested.
Therefore, investing in stocks is quite a passive process, while trading in the stock market is an active exercise.
When you invest in stock of any COMPANY, you also invest in their company. When you buy shares, some percentage of the company is yours. So obviously investing in stock is a business.
Three Categories of Investment In Business
- Publicly traded companies —In this investment, one can invest through stock exchanges. (Comparatively Low risk)
- Private companies — One needs to invest in these companies by pooling money with some investment fund or high-networth individuals. (Medium risk)
- Startups — One can invest in small startups directly or through some startup investment funds. (Very high risk)
Ask Yourself These Questions First
1# Do You Enjoy the Process of Investing?
The motive behind this question is simply to ensure that you are aware of the process of investing.
It is because nobody can spend a big part of their time doing something they don’t enjoy. Can anyone?
Like any other field or career, there will be highs and lows too in investing for sure. Rather this is much more frequent in the stock market as it is a highly volatile field.
Remember mate, if you are not passionate or devoted about what you do especially investing in this case, then you will quit as soon as this will get very hard and make you annoying or frustrating.
2# Why Do You Want To Be An Investor?
The answer to this question will make a clear picture of your query can investing be a business? or can investing be a side hustle?
If your first answer is to earn plenty of money from investment, then surely this is not the right area for you as a business.
Let’s understand this way, the moment you face the complexities of investment you will lose your intelligence and dedication to deal with it.
Think of this like a game and it’s about playing the game. If you have no passion or love for playing a game how would you be able to win the game and become a winner?
3# Are You A Real Good At Investing?
The ultimate and most important question. What good is a person with a car if he/she doesn’t know how to drive it?
If you are not good at investing, what makes you think that it will bring fortune for you? How will you compete with others when you are not even familiar with A to Z of basic investing?
Listen carefully.
It is believed that God has created everyone with some gifts or a specific talent. Therefore everyone is not supposed to do the same activity. It maintains the balance in the ecosystem.
If you are better than others in this field then take that as a green signal.
Choose investing as a business or side hustle only when you have great control over investment rules, strategies, and fundamental/technical analysis of shares and the stock market.
If you have answered all these 3 questions positively it is a good sign and you can move ahead with investing as a business or investing as a side hustle.
But this only won’t make you eligible for beginning investing as a business/ investing as a side hustle. You need to accomplish some crucial cum compulsory conditions to meet your dreams.
Let’s discuss them too.
Three Compulsory Conditions For Investing
At the beginning of this article, we mention some conditions to fulfil for making investing a business or even a side hustle.
1# Significant Amount of Capital
For any business to begin we need an idea, planning, team and capital. Investing as a business may begin without an idea, team or even planning.
But it surely needs a significant amount of capital.
While it is very much possible to trade with small amounts of capital, investing typically requires a good lump sum amount.
This is practically logical if you are looking toward making investing a full-time business. For many people, it could be inconvenient. However, there is a solution to it.
You can invest small amounts periodically instead of investing a lump sum amount. But for this, you must have a regular source of income so that you can keep investing.
To pursue investing as a business one must have huge capital or a good source of regular income from previous ventures.
2# It Involves Deep Research & Great Learning
Capital alone won’t make a difference when focusing on investing as a business. Investing involves significant amounts of research too.
You will need to understand the fundamentals of stock investment thoroughly. Fundamental and technical analyses are two measure departments for conquering the share and stock market behaviour.
Deep research and analysis of particular shares can make you a good pick for investment.
Online courses on the stock market and investing behaviour will help you here. Here are some names that can really help you cement your fundamental investing skills.
Great Learning is an online platform for free financial education. Udemy is another online platform to reach and learn finance courses. ALISON ‘Advanced Learning Interactive Systems Online’ provides too free online certificate courses.
3# Monitor The Market Regularly
The third condition of investing as a business would be constantly monitoring the market. It includes the share market, debt market and Business market.
If you’re considering investing as a full-time business, it is important to monitor the markets regularly. This way you can keep an eye on your investments and analyse how it’s reacting to the market movements.
You may also need to revisit your portfolio often and rebalance it if necessary. So that you can maximize your returns and minimize the chances of possible losses.
How To Invest In A Business & Make Money?
If your investing refers to only stock market/shares then it is clear you are investing in companies. It is because shares mean a small percentage of a company’s assets.
Fast and steady-performing companies give huge returns. Generally, it happens with small-cap companies. Typical and expert investors tend to pick such small but fast-growing companies and invest in them to maximize their gains.
Suppose you have invested in one of such a company. Once it has grown beyond the small business realm, it could become attractive and seem lucrative enough that outside investors want to own it or its shares.
When this happens, these investors often offer to buy the company. These investors surely look at the earnings of the company business.
They also calculate factors in growth, debt levels, and the economics of the industry as a whole to make a clear decision.
If things are more attractive, these outside investors often apply a valuation multiple to the profit stream.
Thus, a company that earns $1 million per year in profit might reasonably sell for $10 to $15 million or even more. That figure is the Capitalized Earnings Value of the company.
Investors Who Grow the Businesses Then Sold
Many small business owners focus on establishing new ventures. They intend to grow such small businesses to a big level where earnings can be capitalized and then the company can be sold.
In financial terms, this is described as a “Liquidity event.”
Business owners and many special types of investors also intend the same investment strategy. They are known as so-called “Venture Capitalists”.
Those who support emerging enterprises in the hopes of someday taking them public in an IPO or selling them to an established bigger company/Businessman in the market.
What Is Venture Capital Exactly?
Venture Capital or VC can be defined as a type of financing, that aids funds for start-up companies and small businesses which indicates long-term growth potential.
Venture Capital often raises funds from Big investors, Investment banks, and financial institutions, which are then invested in early-stage but indicate high-growth companies.
Those companies are eventually sold at a higher price or go public as IPO. When this happens, the VC fund sells its shares for more than the price invested initially.
The profits are split 80% to the investors and 20% to the venture capitalists.
Follow 5: Before Start Investing As A Business
1- The very first tip to follow before starting investing as a business is you must have a regular and secure cash inflow besides your investment.
YOU CAN’T COMPROMISE WITH IT. Investing as a business can’t survive without it. If you already have a strong passive income source it’s a plus for investing as a business.
2- Before becoming a full-time investor you must take care of your all debts, loans and other liabilities first. You must have an ‘Emergency Fund’ so that any crisis or unseen/unwanted events can’t ruin your invested money.
Make a net worth of a considerable amount. With such huge investments, one can get a good amount of dividends.
3- Peter Lynch, one of the greatest Mutual Fund managers of all time has said once,
“Behind every stock, there is a company. Find out what is their business. If you don’t understand the business model don’t buy. Keep your eyes and ears open but do your research.“
This is the true knowledge that explains why investing as a business is not a joke but a full-time job.
After a certain point, most of your time will be spent on studying companies and preparing research. Just to make sure that your investments will be in the right place.
4- NEVER forget to diversify your investment. Keep some cash with you, if you see a good opportunity you can buy new stocks with no delay.
But do remember if there is no opportunity then don’t force yourself to buy rather invest in alternate options.
5- The fifth and most fabulous thing to remember is that once your portfolio income increases sell some shares, withdraw the money, buy new shares which have good future growth potential and keep building your wealth.
You can learn and understand investing skills easily to do well in your new venture, even without prior knowledge of investment.
In Shorts – What We Have Learned?
Ok, here we are with all the necessary insights before our initial query ‘Can investing be a business?’.
Well, it’s time to remind ourselves quickly.
1- Investing as a business can be done only when you have a significant amount of money and time to fully invest.
2– It shows you must have already a profitable business or something that enables you to accumulate such huge funds and time to devote yourself to investing freely.
3- Your business investments may include a mix of physical assets, savings, and growth instruments.
4- You can also start investing as a side hustle with comparatively less amount periodically over time.
5- However, this strategy needs a constant source of income that not only fulfils your expenses but shelters you and your family with a safe financial cover {emergency funds, term insurance, health policy} for any unwanted mishappenings.
If you are in a position to do so, investing as a business can help ensure your long-term sustainability.
But do remember,
As a business owner, you already have a significant investment – your current business.
This means it’s worth thinking about how much risk you want to take outside of your business just to make investing a business.
Especially if anything [in this case investing] puts you under additional financial pressure!
