People often ask me how I make money. So, I tell them I have a social media company. That generates passive income every month.
When I say that, they are very curious about how I do that. Some people even ask me why I do that instead of investing in the stock market.
There’s a difference between private equity and the stock market. And these are my reasons for investing in private equity:
#1 It gives me full control.
When I invest in private equity, I get full control of the business. This means I get to the choose direction of the company.
I am my own boss.
If you have your own business, you can do whatever you want.
If I put my money in the stock market, I have no say in the company. I’d need to own a large chunk of a company before I have any say. Even then, I’d probably need to have millions or billions to get to that level.
But if I invest in private equity, I get full control.
I have 100% ownership of my business. So, I get to say what’s going to happen.
Let’s say I learned something about changing the direction of the business in a marketing course I took. As the owner, I can choose to implement those things at any time.
That’s what I love about private equity.
#2 All the risk and responsibility are on me.
Some people don’t want the risk and responsibility of running a business.
So, if you want to invest in stocks and get passive income, then I get that.
But here’s the thing: if I invest in stocks, I need way more money to get a good return.
And when the risk and responsibility are on me, I have a reason to get out of bed every morning.
If I don’t work on my business, it will probably die. So, private equity gives me a reason to work on things. Which brings me to the next point…
#3 I like to work on things.
I like to be proactive and get my hands dirty. And I like to learn new things. If I follow a marketing course, I can implement that.
If I follow another course about how to automate my business, I can immediately implement that.
I like the whole process of building a business, which you don’t get when you invest in the stock market.
Also, I get to choose the outcome. If I don’t do anything about the business, it’s my fault. If I give control to someone else, that person can mess up, quit, or do something else I have no control over.
But I do have control over private equity.
Even Warren Buffett, the greatest investor, started in private equity. He didn’t start in the stock market.
#4 There is an infinitely greater return on investment.
If I invest in private equity, my return can be way higher than investing in the stock market.
Of course, it takes more time. It takes more effort, but the return can be 1,000% or even more than that in one year.
I bought my first business at the end of 2019. And I ran some calculations and projections.
Based on those calculations, I was supposed to get a return of around 50% per year. I ended up doing way better than that. That shows the power of private equity.
In the first month, we had a 30% revenue increase. But if I invest in the stock market, I give control to other people. And I don’t know what’s going to happen.
Most people can’t invest in private equity because they don’t have the capital or enough time. But there’s a way around that.
You can go to one of those brokers with a list of businesses that are for sale.
You can basically select anything you want. You can filter your search based on any data. You can search based on the price, monthly revenue, or how many hours you need to work.
Some businesses require only 10 hours a week. If you work five days a week, then you can dedicate a Saturday or two extra hours a day to the business.
When you do that and grow that business, then you can hopefully replace your job.