This question on the r/Rich subreddit got my attention because it’s quite relevant to our work with small business owners. New owners weigh many factors before taking the leap to entrepreneurship, and the financial implications of their decision play a big part. A persuasive argument could be made for either side: investing in the stock market or starting a business, i.e., investing in yourself. Instead of trying to represent both sides of the argument, I recruited one of Origami’s CPAs and co-founders, Kris, to debate the question with me.
I’m going to make the case for investing in the stock market and leave it to Kris to make the case for starting a business. I’m going to argue my side as best I can even though, in life, I’ve thrown my lot in with small business ownership. Kris will get the last word.
You should invest in the stock market.
First, if you are deciding between the two options, then you’re deciding what to do with a bunch of money that you already have. That means you have the skills and/or social standing to acquire/access capital. Something in your life is working and working well. Keep doing that, then. Don’t make the mistake of losing focus on the things you are good at (and can keep improving on) to chase after something else, something unknown. The unknown something is like the call of the sirens in Greek myth. You should bind yourself to the mast of your ship, block your crew’s ears, and like Odysseus, sail past their island.
Second, when you invest in the stock market, particularly in index funds, you’re basically betting on the strongest companies in the western economy. Whereas, when you start a business, you’re betting on yourself. The index fund companies employ the collective talents, efforts, resources, and ingenuity of a very select pool. The stock market sometimes has down periods, but over the long term, it continues to grow, and at a healthy pace. Index fund companies can weather economic downturns and boom during economic upswings. Your business will perform (or not) largely through your resources and merits as well your luck and timing. You may struggle while the economy grows, or you may struggle while the economy falters. The economy will emerge from a down cycle, but you may end up in the wreckage it leaves behind. Rising tides can’t lift sunken boats.
Third, when you invest in your business, you’re incurring the opportunity cost of not investing in the stock market. Compound interest is powerful, and when you invest in the stock market, early and consistently, you’re accessing its full power. If it takes a few years to get your business to a point where it can give you a reasonable level of compensation, and it often does, then your business will have to greatly exceed stock market returns in subsequent years just for you to catch up to where you would have been by patiently and consistently investing in the market. Very few small businesses achieve market exceeding returns for long stretches. That’s the stuff that dreams are made of.
Finally, the fact you’re asking yourself this question (and in this way) suggests to me that you’re weighing the financial outcomes and probabilities above other factors like self-actualization, an outlet for your creativity, work-life balance, or personal autonomy. You don’t have a burning desire to be an entrepreneur. You don’t have a brilliant idea you need to bring to the world. Instead, you have a specific financial future in mind (wealth, independence…). You’re considering the next step to getting there, and you’re far enough from your financial goal that getting there will be life-altering. In which case, save yourself the trouble, long hours, and bitter disappointments that too often accompanies small business ownership. Stay in your lane, live frugally, and avoid staking a lot of your attention and available resources on low probability bets that determine your financial future.
You should start a business.
Kris here. Sridhar made a thoughtful case for the stock market, and I respect the logic—it’s a steady, reliable option for many. My task is to argue for starting a business, and I’ll do so carefully, acknowledging the risks while driving home one key truth: investing in the stock market can give you a good life, but a business can make you rich. Here’s why that distinction matters—and why you should consider the business path.
First, if you’re debating this choice, you likely have some money and skills at hand. That’s a solid base, enough to coast in the stock market for a decent return. But a good life — comfortable, predictable — isn’t the same as getting rich. The market grows your cash slowly, averaging 7-10% over decades through others’ work. Starting a business puts that money and skill to work for a bigger prize, betting on yourself for returns that can soar higher. It’s not a casual step, but it’s the move if wealth is your aim.
Second, the stock market spreads your risk, sure, but it caps your upside. You’re tied to that 7-10% ceiling, riding out downturns with no say in the outcome. A business carries more risk — plenty don’t survive — but the payoff can blow past market gains. A good year might net you 20%, 50%, or more, and you’re the one steering. You can cut costs, shift tactics, weather storms on your terms. The stock market builds a good life; a business opens the door to real riches.
Third, Sridhar’s right about compound interest — it’s the market’s slow, steady engine. Charlie Munger nailed it: “Spend less than you make. Always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer!” Follow that as an employee, save 10% of your income, and you’ll scrape by frugally, maybe retiring at 65 with a modest cushion — a good life, if you’re patient. A business, though? It’s a faster track to serious cash. Many fail, and the early years are brutal, but if you break through, the profits can dwarf that 10% grind. That’s the difference between getting by and getting rich.
Here’s how to make it happen: start a new business or buy one at a fair price, run it profitably while paying yourself a fair wage, build systems to hand off daily operations to solid employees, then step back and swap your salary for dividends. It’s not easy. You’ll take a hit—think 33% less than you’d earn elsewhere—for years, living lean. Profitability demands discipline: know your numbers, hit them relentlessly. Then you’ve got to set up a team to run it without you. But pull it off, and those dividends can pile up beyond what the market ever delivers. The stock market offers a good life—steady, safe, fine. A business can make you rich—tougher, riskier, but for a chosen few, worth it.