An essay by John Melonakos
Investing Money
I’m always interested to hear what people do with their money. Many live on the edge of their income, and that is uninteresting. Others save for retirement in low-risk accounts, and that is fine but boring. Retirement accounts and 401(k)’s are for BigCos, not for entrepreneurs.
The most interesting are those that re-invest their money to make more money. Here are some of those options:
- Investing in the stock market. I think stock picking is dumb for the same reasons outlined in this must-read post. Every time you pick a stock, you should ask yourself if you have any credible reason to believe you know something Goldman Sachs does not. Otherwise, you will lose. For these reasons my co-founder and I gave up our ambitions on creating an investment fund.
- Becoming an angel investor. This is an awesome approach. It is very risky though and offers few levers for control once an investment is placed. Great option when you can’t do the next option.
- Re-investing in yourself as a parallel entrepreneur. This is my favorite option and the one pursued by my favorite startup heroes. It places the outcome more in your control than any other approach. The parallel nature of the approach is also risk-mitigating.
What are your thoughts on investing money? Which approach do you follow?