Get All Access for $5/mo

The Stock Market Is a (Legal) Ponzi Scheme Stop depending on the stock market and take control of your money with these investment alternatives.

By Tom Wheelwright Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

tommy | Getty Images

Why is it that an overwhelming amount of American's believe that the stock market is the best place to invest their hard-earned money? When you really think about it, it's essentially a legal Ponzi scheme. The success of your investment depends on people coming in after you and investing at a higher price. As more and more money goes in, the prices go up. But when less money goes in, like when Baby Boomers retire or people pull out because they lose their jobs, the prices start to fall.

Related: Investors Need to Bet On Startups in 2020

Regardless if it makes the most sense financially, Americans continue to invest in a 401(k) because it seems like the easy solution. The money is taken directly out of your check, you receive a tax deduction and some employers match your contribution. So, what could go wrong? To put it plainly, your retirement depends on everyone else putting money into the market. Many people learned this the hard way during The Great Recession in 2008 when the stock market plunged, and people pulled their money out of the market. Some people went from preparing to retire, to continuing to work for years beyond the recession to attempt to make up the money they lost. It's time to stop depending on the stock market and take control of your money. Consider investing in these alternative options to take matters into your own hands.

Real Estate

The government wants you to invest in real estate and will reward you for doing so with a plethora of opportunities to reduce your taxes including the bonus depreciation deduction, 20% pass-through deduction, low-income housing credits, opportunity zone benefits and more. While real estate isn't as liquid as the stock market, investors can enjoy less volatility, a passive income and the ability to gain leverage on capital. It takes time and more initial capital to invest in real estate, but when you learn how to virtually eliminate your taxes with real estate, you may find it to be a worthwhile opportunity.

Related: Learn How to Grow Your Wealth in the Stock Market with This Training

Oil and gas

The United States has been working to reduce dependence on foreign oil for years and, lucky for you, the government provides huge tax benefits to those who invest in oil and gas. There are two ways to invest that deliver the biggest bang for your buck: investing in exploratory operations or development operations. By owning a direct interest in the drilling operations through a general partnership or sole proprietorship, you can deduct close to 100 percent of your investment through intangible drilling costs, bonus depreciation on the drilling equipment, depletion deductions and more.

Agriculture

Investing in agriculture is another great way to diversify your portfolio. In fact, the United States allows a 100 percent deduction for the costs of running a farm including the cost of feed, seeds equipment and other operating expenses the year they're purchased. This long-term investment can be something that's kept in the family and passed down to future generations with no tax obligations now or in the future.

Related: 5 Companies to Invest in After the Health Crisis

In short, the government offers generous tax benefits by investing in assets that contribute to the economy. Invest in opportunities that can reduce your taxes for the long haul and put your money saved to work by reinvesting to creating long-term wealth.

Tom Wheelwright

Entrepreneur Leadership Network® Contributor

CPA, Author and Founder and CEO of WealthAbility

Tom Wheelwright is a leading tax and wealth expert, CPA and author of "Tax-Free Wealth." As the CEO of WealthAbility®, Wheelwright helps entrepreneurs and investors build wealth through practical strategies that permanently reduce taxes.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Science & Technology

Why Businesses Are Relying on Automation to Survive the Labor Crisis

Robots are revolutionizing industries by addressing labor shortages and enhancing efficiency, while businesses navigate challenges like workforce adaptation and high implementation costs.

Green Entrepreneur®

How Global Business Leaders Can Build a Sustainable Supply Chain

Businesses can build sustainable supply chains by leveraging technology to reduce environmental impact, optimize resources and track emissions while balancing operational efficiency and sustainability goals.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Celebrity Entrepreneurs

The Pep Talk From Mickey Mouse We All Need to Hear, Compliments of Chris Diamantopoulos

Chris Diamantopoulos, the star of "The Sticky," "Red Notice" and the voice of Mickey Mouse, gets real about resilience, chasing dreams, and his desperate wish for a normal hobby.

Productivity

6 Habits That Help Successful People Maximize Their Time

There aren't enough hours in the day, but these tips will make them feel slightly more productive.