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I just graduated with my Masters and I'm working at my first job (in the US). Luckily enough, I don't have much in terms of student loans (primarily because my undergrad was completed in India). As something of a personal principle, I decided I would try my luck at entrepreneurship in 2-3 years.

What would the ideal investment strategy be in this case? I would like to keep away from the market because:

  1. It's so damn unstable right now.
  2. I'm not a big fan of the zero sum games that traders play.

Any advice is much appreciated! (I'm not even sure if it counts as short/medium/long term investment in investment speak, so please forgive the erratic tagging)

9

If you are an entrepreneur, and you are looking forward to strike on your own ( the very definition of entrepreneur) then I suggest that you don't invest in anything except your business and yourself.

You will need all the money you have when you launch your business. There will be times when your revenue won't be able to cover your living costs, and that's when you need your cash. At that point of time, do you really want to have your cash tie up in stock market/property? Some more, instead of diverting your attention to learn how the stock market/property works, focus on your business. You will find that the reward is much, much greater. The annual stock market return is 7% to 15%. But the return from entrepreneurship can be many times higher than that. So make sure you go for the bigger prize, not the smaller gains.

It's only when your business no longer requires your capital then you can try to find other means of investment.

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    +1 - if you think you can do better putting your money in the stock market than putting your money in your business, then you shouldn't be in business. – Eric Petroelje Aug 27 '10 at 14:12
  • Agree on everything, but I don't think I can start building a company for the next 2-3 years atleast. How and where do I invest it right now so I can max my returns 3 years later is the problem I'm having .. – Tejaswi Yerukalapudi Aug 30 '10 at 0:56
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    @Tejaswi, if I were you, I would have put my money in the safest investment instruments ( also the lowest yield), don't think about maximizing your investment because with high returns comes high risk. You don't want to invest in the riskiest market, aiming for the highest return only to have the market turns against you three years later and leave you without a single penny, do you? – Graviton Aug 30 '10 at 2:14
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Diversity of risk is always a good idea. The cheapest equity-based investment (in terms of management costs) is some form of tracker or indexed fund. They're relatively low risk and worth putting in a fixed amount for long-term investment.

I agree with Ngu Soon Hui, you're going to need a lot of cash if you decide to start your own business. You may have to cover a significant amount of time without an income and you don't want all your cash tied up.

However, putting all your money into one business is not good risk management. Keep some savings where they can be a lifeline, should you need it.

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    Remember also that in between "cash" and "the stock market" there's a third entity, the bond market, with intermediate returns and intermediate levels of risk. You can access it through mutual funds and ETFs in a manner which is convenient, liquid, and diversified. – fennec Aug 29 '10 at 15:57
  • speculation is only for when you have some form of stability – CQM Oct 23 '11 at 1:33
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I talk about this subject on my blog on investing, I share everything that has worked for me personally and that makes sense. I would say the ideal investment would be to continue the entrepreneur route.

Just make sure you have a clear plan and exit strategy. For me it's all about passion, I love blogging about personal experiences with life, money, and anything that affects our lives.

Find something that you would talk about whether you were paid or not and create a business off of it. You'll never work a day in your life because you love it.

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