For wealth-building, investing in the stock market and/or starting a small business can be debatable. After spending years pondering this question and observing how wealth is accumulated across different regions and industries, I’ve come to realize that both avenues offer unique opportunities and challenges. However, if you have the passion, time, and resources, starting a small business might be the more fulfilling and potentially lucrative path.

The Contrarian Nature of Stock Market Investing

When people think about building wealth, the stock market is often the first thing that comes to mind. And for good reason—over the long term, the stock market has consistently delivered solid returns. But there’s a catch: successful investing often requires a contrarian approach that can feel distinctly against human nature.

To succeed in the stock market, you need to be comfortable doing what feels unnatural—buying when others are fearful and selling when they’re exuberant. This runs counter to our instinctual desire to follow the crowd. It requires strong emotional discipline, a steady hand, and, as many seasoned investors will tell you, the ability to do less rather than more. Overtrading, driven by human emotions like greed and fear, often leads to suboptimal returns. In essence, being a successful stock market investor demands a "strong heart" to navigate the emotional rollercoaster that comes with market fluctuations.

One of the most famous examples of wealth accumulated through stock market investing is Warren Buffett. His success, however, is far from typical. Buffett’s approach is characterized by long-term thinking, deep understanding of business fundamentals, and the patience to hold investments for decades. But let’s be honest—Buffett is a rare breed, and the path to wealth purely through stock market trading is not one most people can replicate.

The Human-Centric Nature of Entrepreneurship

Contrast this with entrepreneurship. Starting and running a small business aligns much more closely with our natural instincts. In business, the more effort you put in, the more likely you are to see results. There’s a direct, intuitive connection between work and reward. You can see the tangible impact of your efforts in the form of customer satisfaction, growing sales, and, hopefully, a healthy bottom line. This is a far cry from the often abstract and delayed gratification of stock market returns.

Moreover, business ownership provides you with control—something that’s largely out of your hands when investing in public companies. As a business owner, you can directly influence your company’s strategy, operations, and culture. This control can lead to greater potential for success and, ultimately, wealth.

This path is not without its challenges. Running a business is time-consuming and demands a broad range of skills—from understanding your market to managing finances, to leading a team. The risk is also significant, particularly in the early stages. Many small businesses fail within the first few years, and the road to success is often fraught with setbacks.

But for those who succeed, the rewards can be substantial. In Northern Europe, for instance, the wealthiest individuals often have their roots in family-owned businesses, real estate, or other tangible assets. These assets are often passed down through generations, ensuring long-term financial stability and growth. Interestingly, the richest people in these regions tend to have lower exposure to the stock market, preferring to keep their wealth tied to businesses or other ventures where they have more control and a direct impact.

Starting a Small Business: A Path Worth Considering

So, where does this leave someone with some savings and a desire to build wealth? If you have the passion, the time, and the right idea, starting a small business can be a great way to build wealth. Unlike stock market investing, where gains can feel abstract and distant, a business allows you to see and feel the direct impact of your work. The effort-reward dynamic is clear, and the potential for scaling your business offers exponential growth opportunities.

But it’s important to approach entrepreneurship with realistic expectations and a solid plan. Start with thorough market research to ensure there’s demand for your product or service. Understand your competition and be prepared for the inevitable challenges that come with running a business.

Moreover, as your business grows and begins to generate profits, it’s wise to consider diversifying your wealth. Even if your primary focus is on your business, investing some of your earnings into the stock market or other assets can provide a safety net and help ensure long-term financial security. This hybrid approach—where you’re both an entrepreneur and an investor—can offer the best of both worlds, allowing you to build and preserve wealth effectively.

Final thought, while the stock market offers opportunities for wealth accumulation, it often requires a contrarian mindset and the ability to manage emotions effectively. For many, this is a challenging path that may not align with their natural instincts. On the other hand, starting a small business aligns more closely with human nature, offering a direct and intuitive path to wealth through hard work, creativity, and perseverance.

If you’re someone with the drive to create something of value, a small business can provide not only financial rewards but also personal fulfillment. It’s a journey that demands time and effort but offers the satisfaction of building something tangible and impactful. So, if you find yourself with some savings and the time to commit, consider channeling that energy into a business idea. It could be the first step on a path to not just wealth, but a rewarding and meaningful life.