Investing vs Entrepreneurship: Which One Is The Right Path For You?

So you’ve got a nice sum of money and are planning to put it to good use.

Should you start a business or invest that money instead?

That’s what we’re going to go try to answer in this post. 

Because of some similarities in the means through which they generate income, the words “entrepreneur” and “investor” are often used interchangeably.

Both types of endeavors contribute equally to the pursuit of financial gain.

For instance, entrepreneurs create and sell products, and investors purchase and sell stocks.

Fast profit is the primary distinction between entrepreneurship and investment.

Entrepreneurship is one such scenario when income is directly tied to day-to-day output and sales.

You can’t get your money out of the stock market on the same day you put it in, so investors need to practice self-control and patience.

The time it takes to withdraw your invested sum from your account can vary.

But I’m getting a little bit ahead of myself here. Let’s first make the distinction between an investor and an entrepreneur. 

What Is An Entrepreneur? 

what is an entrepreneur investing vs entrepreneurship

An entrepreneur is a person who launches a business and takes on most of the financial and mental risks.  

The entrepreneur has long been viewed as a potential source of novel products, services, and methods of doing business.

Entrepreneurs are vital to the success of any economy because they have the drive, creativity, and initiative to both meet needs and introduce innovative solutions to problems. 

Successful risk-taking by entrepreneurs who launch successful businesses is rewarded monetarily, socially, and with more chances to expand.

For those involved, the costs of failed entrepreneurship are financial and a decline in market visibility.

Related Reading: Top Personality Traits Of An Entrepreneur – Do You Have Some?

What Is An Investor? 

what is an investor

Someone who puts up money with the hope of making a profit is called an investor.

Investors can take many forms, like individuals, corporations, or mutual funds. 

Investors use a wide variety of financial instruments to generate a return and meet their financial goals

These goals are typically things like securing a comfortable retirement, providing for a child’s college education, or just increasing their wealth over time.

Stocks, bonds, commodities, mutual funds, ETFs, options, futures, foreign currency, gold, silver, retirement plans, and real estate are just a few of the many investment vehicles available today.  

Investors have a range of tools at their disposal to critically examine prospects, and they often seek to balance risk with reward.

In most cases, investors and traders are two different types of people.

A trader aims to create short-term profits by repeatedly buying and selling assets, while an investor invests money for future gain.

Most commonly, returns are generated by allocating capital as stock investments or debt investments.

Equity investments are holdings in a firm acquired by the purchase of shares, which can result in capital gains and dividends.

How Are Investors and Entrepreneurs Similar? 

The term “entrepreneur” has recently entered common use to describe a person who goes into business with the intention of making a profit. 

Although the clear-cut meaning of this term is sometimes difficult to pin down, the goal of producing something that brings in money never changes. 

If you meet this need, then you have what it takes to be an entrepreneur.

You see, being an entrepreneur is more than just running a company, coming up with new ideas, or making things. 

I consider stock investing to be a form of entrepreneurship because it requires research into a company’s business model, products and services, target market, and competition. 

Starting an enterprise requires the same kind of introspection and planning as any other endeavor.

This may seem a bit murky to some, given that in stock investing, we put our money into companies that have already established a solid foundation. 

On the other hand, with a business startup, you essentially start from scratch.

Despite this, there are numerous parallels between stock investment and starting a business.

The following are some aspects in which investing and entrepreneurship are alike: 

Business Acumen 

Before you invest in a stock or launch a business, you will need the following: 

  • A thorough analysis of the markets 
  • Knowledge of the business model 
  • Familiarity with the identities of competitors 
  • Knowledge of the strengths and weaknesses of the company relative to those competitors 

Folks may say that when we buy stocks, we are investing in someone else’s business.

In the same vein, we invest in ourselves when we start a business of our own. That makes perfect sense!

However, you should know that investing in stock means you are a partial owner of the company whose shares you purchased.

Common Goals 

As an entrepreneur, you must be able to focus on your objectives and keep moving forward until you reach them. 

Stock investing, like entrepreneurship, requires steadfastness in the face of temporary setbacks if one is to ultimately succeed financially. 

A successful entrepreneur or investor is someone who, despite seeing their plans crumble, keeps moving forward toward their objectives.

Taking Risks 

People who establish businesses and people who invest in stocks are celebrated for taking calculated risks. 

An investor puts his money into the stock of a company in the hopes that the firm will do well in the future.

The desired outcome is that the value of his shares will rise along with the company’s growth. 

An entrepreneur must also take a leap of faith in order to create a profitable business. 

Like in business, where capital can be lost on a bad idea, an investor stands to lose money if they choose the wrong company.

Related Reading: What Is The Compound Effect In Business – Read My Thoughts Here.

Why Would Someone Go Into Business Instead of Investing? 

why would someone go into business instead of investing

It May Cost Less To Start

When compared to making an investment, the costs associated with starting a business are far lower. 

If you’re just a novice in business or launching a personal project, there’s no need to shell out upwards of $3,000 per month for an office.

On the other hand, stock investments also necessitate an up-front payment, and maybe a larger one depending on the stock’s price. 

There will also be the expense of paying personnel, which is something most new businesses initially don’t need. 

Less Risk 

The risk is lower in taking the plunge and starting your own company.

There aren’t any major risks associated with going into business for yourself, especially if you’re only starting a modest operation. 

Sure, your business could fail, in which case, all your hard work will serve as a learning experience.

Investing, on the other hand, carries the risk that the company you’re putting your money into may fail or won’t be profitable enough to repay you. 

Moreover, there are hazards connected to investing and inflation that could lead to a significant decline in the value of securities such as stocks and bonds.

Might Be More Profitable 

One’s own business venture may yield higher returns than other investment options.

If you start a business and begin to earn $1,000 per month, for example, you can retain all of that money and use it any way you like.

Of course, this is provided that you keep your overhead to a minimum.

When you begin to see a return on your investments, you may find yourself handing over a larger and larger portion of those funds to the people who run the companies you’ve invested in. 

You should always accept the possibility of a loss before making any investments since there is always risk involved.

Why Would Someone Invest Instead of Going Into Business? 

why would someone invest instead of going into business

Fearless entrepreneurs take on difficult tasks in the name of creating game-changing goods and services.

However, a somewhat significant financial investment would be needed to do this. 

If the business plan doesn’t pan out, you’ll lose everything in a matter of weeks at most. 

In contrast, the financial resources needed to invest in stocks could be lower than those needed to start a business. 

Plus, when you invest in stocks rather than start your own business, you are not tied to the ups and downs of your venture’s performance.

Investing in stocks allows you to correct your course if you make a poor business decision.

It’s a more challenging endeavor for business owners. 

Stock investing also allows you to spread your money across as many different companies as your mind can conjure up, lowering your overall exposure to risk and increasing your potential returns.

You may forget about this possibility if you’re an entrepreneur with your sights set on building a successful enterprise. 

In the worst-case scenario, you could lose a significant amount of your financial resources on a single failed business venture.

One’s decisions can have repercussions on those close to them.

Entrepreneurship was a desire for many people from the working class who wanted to take control of their own lives. 

They gave up their regular occupations to follow their passions full-time.

The effects of this are felt most strongly among families, who must bear real challenges. 

The journey is risky, and your choices will have consequences for those around you. 

Leaving a stable income behind to follow your passion is a huge gamble in and of itself, especially if you have folks to support.

Investing in stocks allows you to keep your day job and make progress toward your goals without sacrificing either.

Related Reading: What Is Digital Investing – Learn More Here.

How Much Capital Would You Need To Start A Business? 

All businesses have initial expenses, but the amount of money needed to get a new small business off the ground can vary widely depending on a number of factors.

Your industry, the volume of goods or equipment needed, and the location of your operations will affect the overall cost. 

You need to remember that money for a launch is just one of many initial expenses.

Rent, utilities, furniture, inventory, equipment, and marketing must be factored into the total cost of opening a business.

The initial investment needed to launch a new company can vary widely, from just a few thousand dollars for the smallest ventures to well over $100K for the larger ones. 

How Much Capital Would You Need To Start Investing? 

Investing your money requires considerably less of an initial outlay than launching a new business, but it still comes with a degree of risk. 

Stock investments can provide high returns for their owners regardless of their field or location, and all it takes to get started is around $500.

Investing in stocks can be a brilliant idea because you don’t need much money to get started. 

And if the stock goes up or becomes more profitable, you could make a lot of money.

The risk associated with any investment, including a startup, cannot be understated.

Keep in mind that money invested is still money invested, and there are no guarantees. 

There is no assurance that establishing a company will result in any profits, let alone profits sufficient to recoup the initial investment.

How Long Until You See Real Profits From A Small Business

For a small business to generate a profit, it may take several months or even years.

It’s common for business owners to feel like a failure if their venture doesn’t turn a profit right away.

However, even large, well-known public corporations often take many years to turn a profit.

It took Federal Express around four years to turn a profit, as an example.

Amazon wasn’t profitable until year nine! 

As a general rule, it might take many years for a business to start making money.

However, depending on the company’s strategy, it is possible to launch a business and get a return on investment in as little as a few months.

An online business, for instance, is able to turn a large profit in just a few months when the market conditions and product offerings are ideal. 

Related Reading: How To Invest In AirBnbs – Explore Here.

How Long Until You See Real Profits From Investing 

Both dividends and capital gains are traditional methods of profiting from stock ownership.

As discussed earlier in this article, dividend income is relatively modest in comparison to the capital required to generate it. 

However, once you invest in dividend stocks or funds, the money can start coming in within a matter of weeks.

Most stock traders aim to increase their capital during this period. 

In the same vein, stock purchases can result in rapid losses.

Nonetheless, this does not deter the vast majority of people invest in stocks.

The time it takes for long-term investors to generate a profit from stock capital gains depends on two main variables:

The Profitability of The Stocks

The first factor in determining your financial success is the viability of the equities you select. 

This is less important now than it once was because most investors buy index funds like the S&P 500 instead of individual stocks.

Stock Market Fluctuations 

Investment results are affected not only by the investor’s ability to pick winning stocks but also by the market’s cyclical nature. 

Many shareholders are unprepared for the impact of a market decline on their profits.

There are a number of causes for both bull and bear markets, and most of them have to do with the state of the economy. 

During a bull market, amassing wealth is simple and can occur rapidly.

The S&P 500 index, which is representative of the performance of the market, rose by more than 29% in value from the beginning of 2013 to the end of that same year.

However, the index could fall by more than 55%, similar to the decline of the S&P 500 index between late 2007 and early 2009. 

However, most investors have a long-term perspective when planning stock purchases anyway.

Traits Associated With Entrepreneurs 


In business, few entrepreneurs hit the jackpot and discover the secret sauce right away.

A business idea has to develop and change over time.

Finding the sweet spot requires experimentation, whether with product design or service offerings.


It’s not easy to be a business owner, especially if you’re starting from zero.

It takes a lot of hard work and perseverance.  

An entrepreneur’s success hinges on their ability to persevere through adversity.

They have to keep going despite the setbacks they encounter. 

When money is on the line, it’s incredibly intimidating to start a business because of the inevitable learning curve that comes with any new endeavor. 

In order to achieve success, it is crucial to keep going no matter how hard things get.


When you’re in charge of your own finances, it’s imperative that you know how to manage money and evaluate financial statements. 

It’s crucial to be aware of your earnings, expenditures, and the means through which each might be increased or decreased. 

Maintaining a healthy cash flow is essential to running a successful business.

Successfully navigating the challenging landscape of running a business requires implementing a strong business strategy and being aware of your target market, competition, strengths, and limitations.


An excellent entrepreneur, like a successful athlete, must be able to tune out distractions and keep their mind on the task. 

It’s a surefire path to failure to let your focus slip, doubt your own judgment and the value of your own business ideas, and lose sight of the big picture. 

Successful business owners never lose sight of their original goals and never deviate from them.

Excellent Communicator 

excellent communicator investing vs entrepreneurship

No matter what you do for a living, effective communication is vital. It plays a pivotal role in the success of any enterprise. 

Successful communication is essential in many business contexts, including pitching your business ideas to investors, briefing staff on the company’s direction, and negotiating with suppliers.

Related Reading: Mind Of An Entrepreneur – What Is It Like.

Traits Associated With Investors 


A successful investor, in addition to knowing how to make the most of their time, also has a firm grasp of the market. 

They are familiar with the company’s financial status and investing philosophy.

You have a right to know precisely how your hard-earned cash is being spent. 

An astute investor looks at reliable historical data to see how the company has grown over time. 

A good investor will also have an exit strategy based on their knowledge and projections. 

Those who are curious and willing to gain new information are more likely to be successful investors.

Good Intuition 

good intuition investing vs entrepreneurship

Timing is everything for a savvy investor. They maintain a watchful eye on the market as it stands at the present time. 

Investors can see the big picture and set the investment time frame with a firm grasp of patterns. 

Good investors are aware of market trends and know where individual companies stand. 

To be a successful investor, you don’t have to follow the crowd; you just have to do what is necessary.


A competent investor’s patience pays off over the long run. It’s a rare and admirable trait that ranks among the best there are. 

Good investors have confidence in their strategies.

Rather than moping about the 10% drop, they tend to hold fast in anticipation of the 100% increase. 

They’re pretty dedicated to seeing things through as planned.

As a rule, they avoid following market fads while buying or selling.


Even the best investors are aware of the risks that come with financial speculation.

They have thought through the potential outcomes of their moves. 

Being risk averse is an acquired trait shaped by one’s exposure to and comfort with the aforementioned traits.

Going The Entrepreneurial Route 

Let’s say you’re leaning more toward entrepreneurship.

Then the following will be your initial steps toward realizing your dream. 

While the American myth of the “rags-to-riches” story has always been a popular one, the last few decades have seen an increase in the romanticization of entrepreneurship. 

People in the 21st century are attracted to the concept of starting their own start up businesses because of the success of Internet companies like Google and Facebook, which have made their founders extremely wealthy.

Most people don’t understand the process of becoming an entrepreneur, in contrast to more conventional careers where there is typically a clear route to take. 

One entrepreneur’s tried and true methods might not work for another.

However, there are some rules that the vast majority of prosperous business owners adhere to:

Get Financially Stable 

This step is not required; however, it is strongly suggested.

It’s true that some of the most successful companies were founded by people with limited resources. 

Still, any aspiring entrepreneur would be wise to start with a healthy cash reserve and get recurring funding to give themselves the best possible chance of success.

Have this in mind before coming up with any type of business structure or looking at possible business models.

Bank On Your Skills 

After securing your financial situation, it is crucial to develop a wide range of skills and put them to good use.

The beauty of this second step is that it can be executed while the first is still in progress.

Learning and practicing new skills in realistic contexts is the best way to expand one’s toolkit. 

If a would-be business owner comes from a financial background, they might find it beneficial to switch to a sales position within the company. 

When an entrepreneur has amassed a wide range of abilities, they have a helpful resource for inevitable times of adversity.

There’s a lot of back-and-forth over whether or not a four-year degree is essential to making it in corporate finance.

Steve Jobs, Mark Zuckerberg, and Larry Ellison are just a few of the successful entrepreneurs who are well-known for their decision to forego higher education.

While formal education isn’t required to launch a successful business, it does provide valuable insight into other aspects of life.

Not everyone turns up to be as successful as these well-known dropouts.  

While the decision to attend college is ultimately an individual one, it is important to consider the financial implications of this decision in light of the high cost of higher education in the US. 

But generally, it’s a myth that you don’t have to study business in college to launch your own company. 

Successful entrepreneurs often have diverse educational backgrounds, which can broaden your perspective and aid you in building your own enterprise.

Consume A LOT of Content 

consume a lot of content investing vs entrepreneurship

Diversifying your knowledge base is essential, but so is exposing yourself to a wide variety of media.

Podcasts, books, articles, and even lectures all fall within this category. 

The content, regardless of distribution method, must cover a wide range of topics. 

Always learning about new things helps an aspiring entrepreneur see existing sectors in a new light, which is essential for focusing a company’s efforts.

Zero In On A Problem And Solve It 

A budding entrepreneur might learn about different challenges to tackle by taking in knowledge from a wide variety of sources. 

A common principle in business is that a company’s product must address a problem faced by either another company or a specific demographic of end users. 

An ambitious entrepreneur can start a business aimed at fixing a specific problem once that problem has been identified.

Startups that go on to great success typically address a problem that has been plaguing a wider industry or the general public.

This is what folks mean by “creating more value within the issue.” 

The only way for an entrepreneur to succeed is to solve an issue or alleviate a pain point.

Let’s pretend you’ve discovered that patients have a hard time scheduling appointment, which is costing doctors business.

Building a website with an appointment scheduler would be the solution.

Live Like A Leader 

In order to succeed, every entrepreneur must also excel as a leader.

Maintaining a focus on completing the necessary tasks each day will not be enough. 

A leader’s efforts are only as good as their ability to motivate and inspire their team members to give it their all.

When you consider the best and most prosperous businesses, you will see that they all share one thing in common: exceptional management. 

Read some CEO biographies and study their speeches to learn what it takes to be an effective leader who others will want to follow.

Expand Your Network 

Most business owners need support.

The international business world is highly competitive, so any boost you can gain is worth taking advantage of. 

Small business owners should prioritize expanding their network. The difference between success and failure can be made by networking with the proper people who can introduce you to suppliers, lenders, and mentors.

You can find people who can help you if you put yourself out there by going to conferences, sending emails, and making phone calls to people in the industry. 

You can talk to a friend who works in a related field. There is no booming business without the proper contacts!

Going The Investor Route 

Do you prefer the concept of being in charge of your own investments and taking matters into your own hands?

You sound like a budding investor to me! 

If you want to be a star investor, you need to treat the process as a journey, not a destination.

First, you need to envision where you want to end up with your investments. 

For instance, do you hope to retire in the next twenty years?

How much would you need to pull this off? It all starts with these questions.

You’ll need to consider your investment objectives when formulating a strategy.

Keep Educating Yourself 

Learn about relevant financial concepts by reading about them or by enrolling in a course on the subject. 

Theory developers who pioneered concepts like portfolio optimization, diversification, and market efficiency deservedly won Nobel Prizes for their work. 

The process of stock market investing entails both scientific analysis and creative decision-making.

It would be unwise to skip over the financial industry’s more scientific roots. 

Don’t worry if science isn’t your strong suit.

Stocks For The Long Run, by Jeremy Siegel, is one of many books that simplify complex financial concepts.

Once you have a firm grasp of market realities, developing your own set of simple rules should be a breeze. 

Consider Warren Buffett, who is widely regarded as one of the most successful investors of all time. 

This well-known phrase sums up his no-nonsense approach to investing: “Never invest in a business you cannot understand.” 

It certainly worked out for him! He may have missed the dot-com boom of the 1990s, but at least he was spared the high-tech bust of the early 2000s.



You are the only one who has a complete picture of your current circumstances.

You are, therefore, the best person to handle your own investments if you just get some guidance. 

Learn to recognize the aspects of your character that will either help or hinder your investment performance and work to improve them.

An investment strategy is a must if you are to make a fortune in trades.

Be Selective 

Investors should be wary of unethical financial advisers whose own goals may diverge from those of their clients. 

Also, as an investor, you need to keep in mind that you’re up against much larger financial institutions with far more time, money, and access to information than you do.

You should keep in mind that even you could be your own worst adversary.

Your own achievement could be jeopardized by factors such as your character, approach, and current situation. 

Stick With It 

Maintaining a focus on the best long-term approach may not be the most fun way to manage your own money.

However, if you can keep going without giving in to your feelings or “fake friends,” you will boost your odds of success.

A Note About Investors 

It’s important to remember that investors have different styles.

Their risk appetites, financial resources, and time horizons are all different. 

Certificates of deposit and certain bond products are examples of extremely low-risk assets that can yield conservative gains, which may appeal to some investors. 

On the other hand, some investors are willing to take on more danger in hopes of a bigger payoff. 

These individuals may invest in stocks, emerging markets, or currencies and must constantly adapt to ever-changing conditions.

An investor frequently maintains a position for years or even decades, whereas a trader maintains a position for months or even weeks. 

Scalpers, for instance, may only be in a trade for a few seconds at a time.

Conversely, swing traders look to take positions that they can hold for a few days to a few weeks.

Related Reading: How To Win In Life & Business – Get To Know Here.

Final Thoughts 

Now that you know what sets entrepreneurs apart from investors, it’s time to learn about the prospects and limits of each profession.

Investors will always keep an eye on new stocks and business engagements.

Entrepreneurs will continue to see growth as technology improves. 

Maybe you should look into the endeavor that appeals more to you because that’s the one that will probably make you more money.

Disclosure:  this article might contain links to the resources discussed.
Some of the links are affiliate links, meaning that I will make a small commission if you purchase a product or service by using the link. You get the same price whether you use our special link or not, and sometimes I’m able to get you an even better deal through my relationships!  More info in my privacy policy.

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Brooks Conkle

Brooks is an Entrepreneur, Sponge, Father, Husband, & Follower of the Golden Rule. He has over 15 years of experience as an entrepreneur after graduating with a BSBA in Finance from Auburn University. He’s addicted to growing new business ideas and any food that includes chocolate and peanut butter. Brooks is a firm believer in creating multiple streams of income and creates content here on to help other hustlers in the areas of marketing, online business, personal finance, and real estate. 

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