4 Investing Options for Entrepreneurs

Investing Options for Entrepreneurs

In September of 2015 there were 27 million entrepreneurs! There are a lot of us and that number only continues to grow. So where are we suppose to invest our money?

We, as entrepreneurs, don’t have an opportunity to contribute to a 401k so let’s talk about our other options for investing.

1) IRA/Roth IRA

One of the top options for entrepreneurs to invest in is a traditional IRA or a Roth IRA. It’s an individual retirement account so you don’t need to go through an employer. I have mine set up at Vanguard.com.

It’s also a tax advantaged account. Meaning you don’t pay taxes while the money is growing in your account.

You can contribute up to $5,500 (if you’re under the age of 50) per year to an IRA or Roth IRA. You can also start withdrawing the money at age 59 ½ without any penalty.

Let’s talk about a few differences between an IRA and Roth IRA.

IRA: A traditional individual retirement account (IRA) allows you to put income in that hasn’t been taxed yet so it will grow tax-deferred until you withdraw the money.

So when you pull the money out, you’ll pay taxes on it.

You must start withdrawing the money from your Traditional IRA at age 70 ½.

If you want to pull money out or borrow against it before age 59 ½ you will most likely have to pay a penalty.

There’s no income limits to be able to contribute (your salary can be high & you’ll be able to still contribute).

Roth IRA: A Roth IRA is an individual retirement account which allows you to put income in that has been taxed, which means it grows tax fee and when you withdraw the money you don’t pay any taxes on it.

You can withdraw any amount you’ve contributed (not the earnings) at any time without a penalty.

Income limits for Roth IRA:

–Single: modified adjusted gross income (MAGI) must be under $133,000/year, but contributions are reduced starting at $118,000.

–Married: MAGI must be less than $196,000, with reductions beginning at $186,000.

A traditional IRA or Roth IRA are both great options for entrepreneurs to invest in.

If you are over the income limits for a Roth IRA, and would rather contribute to a Roth IRA instead of a traditional IRA you can do what’s called a backdoor Roth IRA. Essentially putting money into your traditional IRA and then rolling it over into a Roth IRA.

2) HSA

Another great investing option for entrepreneurs is an HSA (health savings account). An HSA is an account you can set up where you would contribute pretax dollars and be able to pull the money out to use for medical expenses without paying taxes.

This is a great advantage because you don’t pay taxes when you put money in, you don’t pay taxes while the account grows and you don’t pay taxes when you withdraw the money (as long as you’re using it for medical expenses).

This is different from FSA (flexible spending account), FYI.

If you have a high deductible insurance plan, you’ll be eligible to contribute to an HSA.

Your insurance deductible (for singles) needs to be at least $1,300 to set up an HSA.

You can contribute up to $3,400 (if you’re single) every year.

Some HSAs lets you invest the money you’re putting into the HSA account into the stock market, which is why these accounts are so great. They have certain funds you’ll be able to choose from.

They might require a minimum to be in your account before you can invest it in the stock market though, usually $2,000, so watch for that when you’re looking for your HSA.

Here’s a great option that let’s you invest the full amount into the stock market, HSA Bank.

You can choose different stock market funds to put your money in and then let it grow in your account over time.

You don’t need to use that amount every year, like in an FSA, because you won’t lose the money.

There’s lots of different companies/banks that offer HSAs and their fees differ, so make sure to research which one would be best for you (and don’t forget to find one that lets you put your money in the stock market so you can earn more money).

This option is great for entrepreneurs because we usually do have higher deductibles on our insurance plans.

3) Online Taxable Brokerage Account

Another option for entrepreneurs to invest in is an online taxable brokerage account. Although you won’t get any tax savings with this type of account it’s still another viable option.

You can still buy individual stocks, ETFs, bonds and mutual funds through your brokerage account.

When you sell those items, you would pay taxes on them. There are ways to pay less taxes, depending on what you are selling, but with individual stocks, waiting at least a year to sell will help lower the tax rate you’ll pay.

You could also use money out of your taxable brokerage account to make charitable contributions which would help reduce the taxes you’d be paying.

I like using Capital One Investing for my online taxable brokerage account.

4) Real Estate

One more option I want to talk about is real estate. I’m a big fan of investing in real estate because I’ve seen great returns from my own rentals.

Real estate isn’t for everyone, but it’s something to consider. Even if you don’t want to play landlord, you can get a property management company to take care of all that business for you and still make a good return.

There’s different ways to invest in real estate such as the buy and hold method (investing in rentals for the long-term), fix and flip (buying a rundown property, fixing it up and selling), commercial real estate (businesses), land (buying land instead of a building or home on top of that land), etc.

I’d recommend picking one strategy that you’re interested in and getting that up and going before expanding into multiple areas of real estate.


Good to know there are options for entrepreneurs to be investing in, right?! We got our IRA/Roth IRA, HSA, Online Taxable Brokerage Account and Real Estate. It can be difficult to know what to put inside of those options that require us to invest in the stock market, which is why I created a Stock Market Investing course, which you can check out here, to help make it a little easier.

Which investing options sound most appealing to you and what did I miss? Is there something you’re investing in that I didn’t mention? Share in the comments below!

1 Comment

Leave A Response

* Denotes Required Field