Personal Finance

We have $4 million in net worth and found a $30,000 investment opportunity — is it worth pursuing?

Aaron Webber

Published: December 31, 2024 9:30 am

Have more money than you know what to do with and want to get into some expensive hobbies? Want to show off how rich you are? Try buying a small-town business just for fun! Rich people are funny. They think that just because they are wealthy, they can get a working-class job as a hobby.

If you’ve found yourself in this situation, you’re not alone. One rich person online was looking for to buy a small business to keep his wife busy, and took his concerns to the good people in the r/fatFIRE community — a group of people focused on financial independence and early retirement, with a particular focus on getting rich. Here is what they said.

The Question

The author of this particular post is married and in their late 30s. They currently have around $4 million in net worth, which doesn’t include their primary residence. The wife already retired early and the author is around five years away from retiring themselves.

Essentially, the opportunity has presented itself for the author to buy a cheap, seasonal business nearby for a $30k investment. It earns around $100k in revenue every year, according to the author, and operates at a loss. He wants to buy it to give his wife something to do and keep her busy, sort of like a hobby.

They are not concerned about the low cost of investment, but they were wondering if other members of the community had invested in similar businesses for similar reasons. They wanted to take advantage of any tax benefits owning a business like this would give them as well.

Please remember that all the responses are opinions, including this article. Please speak with an expert before making any silly financial decisions.

The Community Response

There were plenty of commenters trying to crunch the numbers based on too many hypothetical situations and not enough concrete information. In the end, most commenters said that the author should not buy the business if they have even the faintest hope of trying to get any significant tax breaks. Instead of trying to be clever, instead put your money to more profitable, useful, helpful, or smarter purposes.

The IRS only allows business owners to claim a loss on a business for three out of every five years, so the tax benefits are limited anyway. Also, owning a business just to take advantage of an employer-sponsored 401(k) or other employment benefits is a bit backward, as any money and benefits you get in return are going to be dwarfed by your losses since it was your money in the first place.

A smarter course of action, according to commenters and common sense, would be for the author to ask his wife what she thinks, or if she would even want to run a business. If not, they should instead learn to just be happy with how much money they have and learn to enjoy life, instead of trying to maximize their profits and playing games with people’s jobs and livelihoods just so they can get a tax break.