“The business of investing is not the same as investing in a business.”
— Maxims of Wall Street, p. 143
During the summer months, I enjoy listening to the audio recordings of all the sessions I missed at this year’s big show, FreedomFest. I could only attend about 15% of the sessions, so I spend several weeks catching up on all the other fascinating topics (250 sessions in all).
The first session I listened to was “Wall Street vs. Main Street: Which is Better for Making Money?” Making the case for starting your own business was Gena Lofton, real estate investor, entrepreneur and a former manager of DirectTV. She’s a follower of Robert Kiyosaki, author of “Rich Dad, Poor Dad” (who also spoke).
Based on her vast experience, she’s convinced that investing in business and real estate is the best way to become financially independent. You control your own destiny, and taxes are relatively low compared to salaried employees.
“You used to do well going to college, getting a job, saving money and investing in the stock market,” Lofton said, “but that’s no longer the case.”
Alex Green, chief investment strategist for the Oxford Club, author and long-time supporter of FreedomFest, argued the case for investing in the stock market. He warned the attendees that starting your own business is much riskier than investing in the stock market. More than half of all new businesses go under within five years.
Green said he had a bad experience investing in a duplex, struggling with renters, upkeep, taxes, closing costs and regulations. Investing in stocks is much easier and costs less, he maintained. Commissions and closing costs in real estate can add up to 8% or more, but they are almost nonexistent in the stock market these days.
“You don’t have the hassles of running a business when investing in the stock market,” Green said. “Let someone else do the heavy lifting. With a click on your computer, you can invest in some of the best-run businesses in the world.”
Jack Reed, a real estate guru and author who has a Harvard MBA, was the moderator, and drew upon his vast experience on the pros and cons of both investing in business and the stock market.
“Your ultimate goal is not to minimize your taxes,” Reed warned, “but to maximize your after-tax income.”
The Bottom Line
My take: I too have invested in both businesses and the stock market, and they each have their pros and cons. Investing in a business is certainly a potential gold mine. Look at all the business entrepreneurs listed in the Forbes Richest People in America issue: Most are self-made millionaires.
But starting your own business is not for everyone — most people are better off working for someone else, getting a regular paycheck, living within their means, saving and investing in the stock market via a 401(k). It can be done by becoming a knowledgeable investor.
Order the FreedomFest Audio Recordings — only $162.50!
Want to hear the Wall Street vs. Main Street debate, as well as 250 other sessions at this year’s big show? Call Harold of Ensign Publishing toll-free at 1-866-254-2057 to buy all the recordings for half off — paying only $162.50 — by using the code 50off2018. Or go to www.miracleofamerica.com.
Join me at the San Francisco MoneyShow, Aug. 23-25, Hilton Union Square
I’m scheduled to debate Mike Turner again on “Buy and Hold vs. Market Timing.” Plus, listen to Jim Woods (Fast Money Alert), Jeffrey Saut (Raymond James), Gene Simmons (KISS co-founder, vocalist and bass guitarist), John Buckingham, Neil George, Marilyn Cohen and Kelley Wright. To get your free tickets, call 1-800-970-4355 and be sure to mention code 045690.
Toronto MoneyShow, Sept. 14-15, InterContinental Toronto Centre: I will have a main stage appearance on “Everything You Need to Know about the Markets,” as well as a breakout session on “The SWAN Strategy: My Five Low-Risk Ways to Earn High Dividends and Capital Gains.” Other speakers include Kim Githler, Tom Sosnoff and Gene Simmons. To register and attend for free as my subscriber, call 1-800-970-4355 and mention priority code 045972. Or go to MarkSkousen.TorontoMoneyShow.com.
You Blew It! Federal Government Continues to Overregulate
Presidents come and go, but the “deep state” bureaucracy continues to operate.
Donald Trump has promised to “drain the swamp” of excessive taxation and regulation of business, but the fact remains that the bureaucracy of the executive branch continues to impose fines and regulations on entrepreneurs and business. For example, I received a report this week from tax attorney Jeff Verdon about the IRS and the Department of Labor hiring more staff to harass businesses with pension plans.
Verdon cautioned, “The U.S. Government continues to crack down on organizations that offer Employee Benefit Plans in an effort to ensure compliance with the myriad of rules set forth by the Internal Revenue Service (IRS) and Department of Labor (DOL). In fact, the DOL has hired more than 1,000 audit staff over the past few years in order to conduct more stringent investigations.
“If your organization offers its employees a pension plan, 401(k) plan or 403(b) plan, Employee Stock Ownership Plan (ESOP), or any other type of benefit plan, you may be required by law to have the plan audited on an annual basis.
“Fines imposed by the DOL for violations of the Employee Retirement Income Security Act (ERISA) have increased 72% from 2016 to 2017, resulting in $1.1 billion collected last year alone. Meanwhile, the IRS is also on high watch for employers that may have violated the Affordable Care Act’s employer-shared responsibility provisions, dating as far back as 2015.”
Maybe it’s time for President Trump to issue another executive order…