Starting A Business Versus Investing In Paper Assets – What Is The Best Option?

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One common question which people have always asked me in my years of business coaching and consulting is this: “I have this amount of money and I don’t know how to invest it or whether I should start a business with it “

Other questions you may need clarification on includes:

What is the best thing to do with the money you are earning as a salary earner or as an entrepreneur?

As a business owner, should you just focus on your business and reinvest your earnings into the business or invest part of your earnings in paper assets?

As a salary earner, should you invest in paper assets only or try to start a part-time business?

I shall address the above questions in this article.

By business, I mean getting involved in the sales of goods and services for profit. Also, by paper assets, I mean investing in income generating investments like shares, treasury bills, mutual funds and bonds.

Prospects in starting a business

In reality, there is no limit to how much you can make or how far you can go in terms of growth, when you start a business. A business you started with N100,000 can grow into a large multinational business worth millions of dollars over time, if well nurtured.

However, it is not easy to start a business. It takes courage, hard work and  a determination to succeed against all odds in order to succeed in business.  Infact, you could suffer the loss of your capital. Also, a business can take time and patience to be nurtured before it can start yielding good income.

Another consideration is that starting a business full- time or part- time will require more of your time compared to investing in paper assets.

Prospects in investing in paper assets

Investing in paper assets can be a good way of growing your wealth easily without much labour or stress and with minimal risk of capital loss.

Most paper assets ( except stock investment ) will give have a moderate and steady income ( depending on the amount of capital you invest in it ).  For example, as at today, Nigerian mutual funds yields an average of 12.5% interest on your capital per annum, while the Nigerian treasury bills yields an average of 13.5%  to 15% interest on your capital per annum depending on your capital.

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Also, most paper assets are risk free, especially mutual funds and treasury bills. This means that there is little or no chance of losing your initial capital.

In addition to these, most paper assets can be used as collateral to seek and secure loans from the bank.

Again, investing in paper assets give you time to do other things, especially if you are an employee with a very high time demanding job.

However, the downside of paper assets investment is that most times the income from it is not large, especially if you are not investing with a large sum of money.

Factors that you should consider before choosing to start a business or invest in paper assets.

Now, what determines what you should do among the two options?

Here are the factors that should determine whether you should start a business or invest in paper assets.

1. How much time you have: Starting a business requires more time than paper investment.

2. How much capital you have: Most paper assets can be acquired with very low capital as little as N 5,000. However, the start-up cost for most businesses is higher than what is required to acquire paper assets.

3. Whether you have the needed business experience: Except for stock market investment, most other paper asset investments do not require expert knowledge before you can get into it. However, most businesses require that the entrepreneur should have some level of experience or knowledge in order to make a success of it.

4. Your risk profile or appetite: How much risk you are willing to take. Risk can be low, average or high risk. Mutual funds and treasury bills are of very minimal risk while the stock market investment is a high risk investment. However, most businesses involves some level of risk. Risk of business losses, theft of goods and uncertainties of profit yielding as part of risks involved in starting a business.

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5. Your income expectations: How much income do you want to have. Low, moderate or high income? There is no limit to the income you can make from a business over time. However, the average income from paper assets is marginal.

6. The need to diversify your portfolio: If you want to have a multiple income stream, then it is a good idea to have your money in both business and paper assets. Doing this will help to spread your risk as all your eggs are in different baskets instead of being in just one basket.

My recommendation

For some persons who are into a profitable business, investing in paper assets will seem like wasting money that could have yielded even more profit.

If you have some amount of money and you haven’t decided yet about what to do with the money, you can invest it in paper assets to help the money to yield some income instead of depreciating in value due to forces of inflation while you take your time to decide what business to do with the money.

Also, if you have a job that is time demanding, which wouldn’t allow you to run a business, investing in paper assets is a good decision and a way of earning some more income.

Even if you are into a profitable business, you should have some spare money to invest in paper assets because, this money would serve as a back up for you and would help you to diversify your portfolio in case your business experiences some challenges.


Only alone knows what is best for you. From the recommendations above you should be able to make an informed decision about where to put your money.

However, I do recommend that you try to have a mix of every thing. If you have a business that is yielding good profit, it doesn’t mean that you can’t set aside some amount of money for investment into treasury bills or mutual funds.

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As an entrepreneur you can have some paper assets as backup funds for your business or for your children’s college or university fees in the future.

If you an employee who invest majorly in paper assets, this doesn’t mean that you can’t plan and set up a part-time business. This is very important. Starting a part-time business is very good for all employees. The reason is that in addition to helping to provide some additional funds to you, it will also help you to get ready to start a business of your own in the future or in the event of loss of job or retrenchment.

I have seen several persons who got retrenched or retired from large multinational companies and are given large sums of money as gratuity. Many of these folks lose these monies they are given while trying to start businesses, because they’ve got little or no previous knowledge or experience  in running a business.

Therefore, try to be versatile. No knowledge is a waste.

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