Did you know that investing in stocks is considered as part of owning a business as technically it means that you are part-owner of the company? The number of stocks you have purchased will determine the percentage of ownership you have in that company. The more stocks you have, the higher your percentage of ownership is in that company. There is also another factor such as the stock pricing. It will fluctuate depending on the market situation & the company’s performance. If you buy at a lower price & the stocks price increase, your capital value will also be increased.

Having my own business & being part owner of a public listed company, there are pros & cons that you may want to consider if you are having limited funds & planning to invest in either one. Imagine having a minimum amount of capital & you wanting to either venture into your own business or thinking of being a shareholder of a public listed company. What is your choice? Below are the pros & cons of starting your own business vs stocks investment.

Starting Your Own Business

Pros: 

1. Your Are Able To Manage Everything
It can be a good thing or a bad thing. The good thing is, the more effort you put in, the better result you are able to get.

2. More Income
In my experience of owning a business & investing in stocks, my income from my own business is higher compared to the dividend amount I am getting.

3. You Determine The Idea
Starting your own business means you have an idea of what you can do to earn extra. The idea may be some existing competitor business that you are duplicating or a gap that you are trying to fill. It will determine the success or failure of your business.

4. You Make Most Of The Decisions
As a business owner, you are able to make all vital decisions. Whether it is a business partnership or self own business, decision making sometimes can be challenging but the good thing is, you are able to learn & grow from it.

Cons:

1. Time Consuming
Starting a business is not that easy. When you have the idea, you will have to go through detailed planning before the launch. There is a lot of work that needs to be done & it will usually eat up your time. If you love challenges & don’t mind long hours, you should do it.

2. Higher Capital Compared To Stocks Investment
I’ve invested in both businesses & stocks. My lowest investment so far in a business is at a minimum of RM1,000 and averaging around RM20,000. For stock investment, you are able to invest with as low as RM100.

Stock Investment

Pros:

1. Low Capital
You can be part owner of a public listed company with as low as RM100. That is way lower than starting a business.

2. You Don’t Have To Be A Professional At The Industry To Invest In It
Imagine owning bank stocks but you may not be 100% clear in the full business operation. It happens to me as well. I am part owner of a bank stock but personally, I don’t need to know 100% in detail on how the operation runs as I have professionals running it on my behalf. That is the perk of being part owner of a public listed company.

3. You Can Accumulate The Stocks Over Time
You may start out with RM100 capital & invest in it over the next few years. You may end up owning RM100,000 worth of that company’s stocks. That also means that your percentage of ownership has increased.

4. You Don’t Have To Spend Time Running It
Since the company has hired professionals to run the business, all you have to do is wait for the dividend payment for each quarter or yearly basis.

5. Diversification
Imagine having RM1,000 & you plan to diversify your investment in a few public listed companies. It is possible as you are able to invest with as low as RM100. It also depends on the value of the company for each unit.

Cons

1. Lesser Income
My personal experience of starting my own business vs owning a public listed company stock is the amount of profit share or dividend. With the same amount of investment, I am able to earn more from my own business compared to the dividend of a public listed company.

2. You Are Unable To Make Any Decisions
Your role in a public listed company is as a sleeping partner but you are able to cast your vote during the Annual General Meeting. If your ownership percentage is low, your vote may be counted but it won’t affect any major decision making.

3. Ownership Percentage Is Low
With the same amount of investing in a business vs investing in a public listed company, your percentage in a public listed company is definitely lower as it is more established & the company value is usually worth millions.

Conclusion:

I’ve had my fair share of starting a business & investing in a public listed company. Personally, it is more tiring to run start my own business as it requires a lot of effort & time but seeing the business grow makes me feel satisfied & having a sense of accomplishment. If you ask me which is a better choice, I would personally try both with the purpose of earning extra income. For stress level, starting a new business has given me more stress but I personally love the challenge. However, f you do not have business ideas yet, you can invest in stocks instead.

OSS!

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