This is not clickbait, it is FACT.
The caveat is this applies to full-time entrepreneurs and those with a side hustle. NOBODY has to be exempt from it.
You are probably thinking right now, how can you say definitively there is a “best asset class for ROI”? Because I’ve done the math on my time as an entrepreneur and the verdict is clear, it’s extremely clear quite honestly. But rather than just tell you that, I’ll give a few examples.
One of my preferred investment vehicles to build personal wealth is real estate, nothing crazy here. I’m not a fix/flip guy but rather a buy/hold style investor, it just suits my time availability and long term goals better currently. With that said, because it’s not my daily business the process of buying an investment property is both tedious and up front capital intensive. I can invest 50k as a 20% down payment on any given property that may cash flow a few hundred per month, and while cash flow isn’t the only reason to do these investments – it is nice to have.
Another option is the public markets, from a time standpoint assuming your either believe in indexing or hire a wealth manager the “pain” in getting this done is next to nothing. You can historically look for a 7-10% return on your money over long periods of time and for the average investor leverage doesn’t come into play here the same way it does with real estate (I’m aware you can leverage stocks but the simple fact is most people don’t/shouldn’t so let’s use this premise).
The third most likely option for time investment is in your core business, which is what I would like to make the case for always having the best ROI. I don’t know everyone’s business, but in our PEO brokerage, it’s not uncommon for an account to yield a monthly income of between $500-$1200. When fully engaged in the business I’ve been able to do several of these deals per week, each of which throw off more cash flow than a typical SFH real estate deal without the down payment or leverage risk component. My guess is your business, whether it is construction/pest control/dog walking/etc… has the ability to yield a similar result for the time invested.
The point is not that you should only invest in your core business, that would be silly, but a trend I’m seeing is people really focusing all their time and effort in learning about investments and alternative wealth-building tools. This is great and necessary to some degree, but it’s easy to overlook your most powerful wealth-building weapon in the arsenal – which is your unique personal capability to generate income via core business operations.
Diversification is great, and we should all do it to the utmost of our understanding/capabilities. But I’m willing to bet that the simple path to wealth for most entrepreneurs would be to pick a simple one or two-pronged investment plan, automate it, and go back to focusing on their core business responsibilities. This advice also applies to the full time W2 employees that have a nice side hustle going, you’ll likely make more money doing that than you will chasing down the perfect long term residential real estate deal.
The time value of money is a real thing, so is the “monetary velocity” aspect, which I very much look forward to writing about soon as it’s been top of mind for some time now.
In closing, let’s focus on what we do best friends.
Let’s do the math
Calculate your mortgage or work with the compound interest to see what it can do to expedite your wealth building.