Category: Money

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Risk and Reward- The Vital Two R’s of Business


We are risk takers by nature, all of us, in varying degrees. But marching into the unknown is a human instinct that manifests itself in obvious, as well as mysterious ways. Every hour of every day we take risks. You may allow your mind to explore this idea and find examples. Traveling to a new country, hiking an unmarked trail, buying a gift for a loved one, tasting a weird- smelling food, going to war, getting married, asking for forgiveness, climbing the Himalayas, camping, skiing, driving, falling in love, leaving home, and doing nothing is also a form of taking risk, yet indirectly.

For the sake of our topic, let’s narrow down that endless list to just one: Starting your own business and deciding to become an entrepreneur.

Why do people leave the comfort and security of a guaranteed pay-check, and go on their own? For starters, that comfort has become unattainable lately. Downsizing, mergers, acquisitions, financial crisis, to name a few, have made job security a thing of the past.

But that is not the main reason entrepreneurs go out and face the world alone. It is something within each and every one, a calling if you will. I bet you’ve heard this before and you might be thinking: “OK, a calling, but what is the percentage of success of that calling? Show me the money!”

True, no matter how strong a calling was, and how enthusiastic the person would be, a business venture must yield financial results. In other words: Money 🙂

That’s why, before delving in the ocean of entrepreneurship, one must evaluate few traits that are vital to making that journey a pleasant and fruitful one.

So what are those traits? The first that comes to mind is risk tolerance. I’ve talked about this, giving it an acronym of RT in several posts about investing, and it still applies here, probably more so. A low RT isn’t going to help here. A very high one would result in taking too much risk, and again that is dangerously dangerous 🙂

We are looking for a healthy RT, which on one hand drives the entrepreneur to explore new, uncharted frontiers, most of the time alone and with little knowledge and tools, and on the other, keeps him/her aware of the potential challenges, and do enough research and preparation ahead of, during and after taking the risk. What is that called in plain English? Wisdom combined with courage. And in eloquent English: Courageously wise or wisely courageous 🙂

The heart of our discussion here is the following:

‘Risk and Reward are proportional: The more risk one takes, the higher the probability of reward. The opposite seems to be true, most of the time.’

Let’s start with a simple example: If you decided not to teach your four-year old child how to ride a bike, fearing the risk of injury, you denied him/her the rewards that come with riding a bike. One of them is innocent joy!

To get any reward, we must do something, right? And any doing involves taking a risk, no matter how small. That’s why they are related proportionally.

Raise the level of one, the other gets a boost. The challenge is to find that threshold where raising too much would result in unwanted results rather than rewards. And that threshold differs depending on the situation.

In the example above, rushing the learning curve increases the risk of injury. Taking the matter way too slow may delay the reward or even prevent it from happening.

We need to be patient with the whole process. We start by taking small risks and observe our emotional and mental reactions, just like building, you start with a foundation, then keep adding to it.

Another aspect of this building process is appreciating the results, no matter how small.

When it comes to building a new business enterprise, the principle would be the same, however, the application is different.

Does that mean you start with a tiny little venture then expand gradually? That’s one way to approach it. Say open an online store with only one product line, give it your best till it starts making profit, then add a second product line, and so on.

Nevertheless, if you know that your RT is high enough to get into bigger business adventures, especially if you know you have good financial and practical backing by trusted partners, then you may want to create a vision that would lead to more aggressive plans. For example, starting an eCommerce platform, where small business owners can open their one-product-line stores.

The web is full of tools and articles on how to assess your RT level. Here’s one, which I have no affiliation with, and can’t guarantee its results, but you may want to give it a shot, or look for something else in that line of tools:

http://www.moneycontrol.com/personal-finance/tools/risk-assessment-tools.html

In conclusion, know thyself before starting a new business. The time, money and energy spent doing that is worth the clarity that result from being aware where your next step will hit the ground.

All the best,

The WEalth MAker

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Multiple Streams of Income (MSOI)


msoi

 

I was first introduced to this term by Bob Proctor, a prominent Canadian author and motivational speaker on matters of financial wealth, among other fields related to human success (the definition of human “success” varies depending on the paradigm we use).

The concept is fairly simple, but not simplistic. During and after the industrial revolution (1760-1840), most workers started earning their income through employment in factories and enterprises that supported factory work (banks, press, railways, post, mining, and so forth).

By the turn of the 20th century, more than 50% of the North American workforce had shifted to employment. Excluding the Great Depression period (1929-1939), that percentage had experienced an upward trend, reaching its peak during the era after WW2. Fewer people took farm jobs or started their own ventures. Large corporations absorbed small businesses, manifesting capitalism on a wide scale.

Most of the population had retired to a sense of financial security derived from a “guaranteed” paycheck. The widespread possibility of serving the same employer for prolonged periods of time had supported that disposition. Job security had been perceived as a reality.

The Information Revolution came to shake things up. By the mid Eighties, assured continuation of employment had taken a backseat. Clinging to a job that would end with a two-week notice turned out to be questionable.

Disruptive changes are not always bad. They serve the individual(s) who is open to learning and growing, riding the wave of change, instead of getting washed out by it. Rigidity is synonym to breakdown!

Where does all of that lead us to? Flexibility, autonomy, and being in command of one’s life. Blindly following the crowd is risky, and oftentimes, intellectually and financially fatal. Relying on one source of income in today’s economy is not a wise choice, to say the least.

What are the alternatives? Take multiple jobs at different companies? Work “harder” at the same job to the extent you forget your children’s names or birthdays?! Or rely on social programs, where they exist, to bail you out when the unfortunate happens?

None of these options is viable. We can easily discount the first once we consider the conflict-of-interest provision in any employment contract, let alone the strenuous stretch and excessive stress endured by the employee.

The second is possible, and so many people have traversed that rocky path. However, the impact on personal life is undeniable. Furthermore, those who put 70- and 80-hour work weeks are not immune to reorganization storms. Management by numbers has become the rule at the end of the day!

Social programs can help, but they are not enough. They are meant to supplement other incomes, not replace them.

Now we’ve come to a point in our study where we are ready to consider better alternatives. Alternatives that lay a strong financial foundation, upon which to pursue higher intentions. The tool must remain a tool. When making money becomes the chief concern amid the struggle to “make ends meet”, life loses its meaning, its exuberance and joy. Happiness seems like a mirage dancing on a sun-broiled horizon.

Here is a mathematical representation of the solution:

T = P + (n * S)

T: Total income

P: Primary income

S: Secondary income

n: Number of secondary sources

P could be a form of employment or an established business. What about S? It can be any legitimate, ethical activity that produces money in exchange for providing real value.

Investing is one example. Online stores, part-time teaching/training/coaching, freelance writing (blogging, publishing, technical writing), creating digital products and selling them online on sites, such as Amazon™ and ClickBank™.

You could discover more sources. The bottom line is to find something you love and have the skillset to produce, grow and maintain, without jeopardizing your personal life. Again, we’re building a foundation, not a whole structure.

I have covered investing in great detail throughout this blog. You can learn about online stores by reading this particular post: https://soaring-eagle.org/2012/07/04/making-money-online-online-stores/

Please share with us your comments and suggestions. This article is not comprehensive, as the possibilities are endless. Its aim is to open doors of exploration, to deliver the message that there is more to work-life than a single option…

 

The Wealth Maker

 

© Image Credit: www.windowssearch-exp.com

 

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How Can an Investor Read The Future?


Investing is not only an intellectual enterprise. It challenges all dimensions of an investor’s personality and character. That’s why it is an inner job, before it manifests in the outer.

Nonetheless, an investor is not a fortuneteller, a speculator, or a gambler. He or she sees the activity as a business, which is prone to loss and profit, rise and demise.

Human beings are bound by the laws of cause and effect, and governed by the flow of time. Is that so? We tend to “like” to surrender to such determinism because our minds need to find closure on everything. Without such “unconscious” obedience to these laws, without time, the mind gets lost.

Within each and every one of us is a potential greater than the mind. Tapping into that potential requires awareness and inner work. You may start by paying attention to the mind’s ceaseless thinking, and train yourself to be an observer, not a participant in the thousands of thoughts the mind conjures up everyday! You can reach a stage where you “choose” what serves you and add value to your life, while releasing that which confuses or troubles you.

The mind can’t stop working. This is a blessing. Nevertheless, it could turn into a curse when the mind starts using us to “entertain” itself, especially as it finds itself “free”. Keep it busy with something suitable to its nature, and useful to you and to the world around you. Apart from that, practice the art of “un-participation”. You are not your mind!

Here you might say: I’m confused! Are you telling me to be mindless?

Not at all. I’m asking you to be “mindful”. To be the master of your mind not its slave. There is a huge difference between the two worlds.

How is all of that related to investing? Surprisingly a lot!

When you become in command of your mind, and hence your life, all your activities start flowing effortlessly. You bypass the mind’s resistance to the new in favor of the old and familiar.

That leads to a very important fact, which sets the stage for the rest of this discussion: History does not repeat itself! Each and every moment is independent and new, and it may surprise you.

Does that make me read the future? You might ask.

Not literally. However, it advances you light years ahead in your ability to engage the moments while they unfold, which is, in my humble opinion, better than reading the future.

As you rid yourself of a troubling past, and be fully present here and now, you become “aligned” with true universal principles. Time becomes your friend. Cause and effect your servants. You are no longer asleep, spiritually. You start to “see”. You begin to “know” without thinking. You step into a new realm that has already been within you, but now you’re “awake” to its existence and brilliance.

From this new foundation, your investment decisions (and all your decisions) will change, for the better. You have on your side the best advisor ever, you! The real you…

This can only be proven through direct experience. Do not believe any of the above, but try it and practice it, honestly.

After all, whose life and whose money are we talking about? Doesn’t that deserve exploring something new? Haven’t we had enough of resigning to the old, only because it is familiar? And we all know, too well, that “familiar” does not equate to “successful”. Most of the time, it leads to the opposite.

Any breakthrough, throughout human history, has come about by challenging habitual thinking and exploring the frontiers that laid dormant behind the mind.

Gravity isn’t only physical!

The Wealth Maker

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Beware of Binary Options (BO) Trading!


Despite its newness, BO trading has almost gone mainstream. The promise of fast and easy attainment of riches fuels its overwhelming proliferation.

People with no experience whatsoever embark on this adventure. After all, opening an account takes seconds. Placing a trade is swift and instant, and so is losing money!

The business model of the so-called binary options brokers (many of them are regulated by gambling authorities, if at all) is an old-fashion scheme, where the winners take part of the losers’ money, and the house keeps the rest. Does that remind you of any other business model?!

New brokers are popping up everywhere. The only region that doesn’t welcome them as much is North America. None of them is recognized or regulated by financial authorities in either Canada or The US.

The platforms, the graphs, the glamour, and even the so-called “rules” play on the psychology of the users, who soon become losers of hard-earned funds.

What is the split? Probably one winner in every 100 or more members. So let’s run a quick calculation. The winner is so good, he/she nets $1000 a day. The losers, on the other hand, give up an average of 50/member. Total loss: 50 *100 = 5000. The winner gets a grand, and the house keeps four; not bad at all! Keep in mind that this example assumes a very low-end of the game. Usually, the split is one winner out of at least 500. And the losers let go of more than 50 a piece.

Is that business, investment, or even trading?

No. It is not, by any measure. It’s a new form of online gambling. People talk about using technical analysis to “predict” the closing price of an asset, when the trade expires. What’s that called? Betting, right. Fighting the odds, with eyes less than half-oppened.

Financial markets are unpredictable on the long-term, let alone for minutes and/or seconds. A price graph may decide to have a “hiccup” right before expiry, costing you all the money you’ve put on that price closing higher (or lower) than the entry point. The reason could be a piece of news, High Frequency Trading (HFT), or any other unpredictable event that may have taken place momentarily, causing a trend to change direction, wiping out your “investment.”

Is that fair? Well, first, no one forces you to do it. And second, which is more important, this is an emotional rollercoaster. Very few people can maintain their composure in the face of such rapid changes. Those are the few winners, exactly as in poker, or any other money game.

Money is a vehicle to exchange real value. Playing with it isn’t healthy, both for the individual and the economy.

Please notice that nothing is being exchanged, not even futures (for example, commodities or stocks). The whole deal is about prediction and speculation. The “trader” buys the “right” to put money on a probability, which is affected by factors that are entirely outside the reach and control of the trader. Can you buy and sell probabilities? You can utilize statistical data to make an informed investment decision. Here, that piece of information has become the asset!

We need to know the traps so we wouldn’t step on them.

Go back to the articles on this blog, or any other source you trust. Gain the knowledge of real investment, real work. Know your options, and never commit money to buying fish in the ocean!

The Wealth Maker

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Business and Technology: Allies or Adversaries?


Not long ago, trade was at the core of business: The exchange of value between the buyer and the seller, physically. People used to travel, on horseback, carrying their homeland goods, to distant territories. They would trade the goods they have with what the other country had to offer.

Nowadays, billions of dollars get exchanged everyday, across the globe, without anything physical being “traded”. The wonders of technology!

Millions go online to trade commodities they never own, or to bet on price movements of stocks, indices, currencies or commodities. What is being exchanged? Where is the value transferred from the seller to the buyer?

Has technology added an inherent value to business dealings?

Has it made making money easier or losing it faster?

A merchant in ancient times wouldn’t lose his shirt overnight. Today, a business may go down in days, due, in part, to a blind reliance on technology.

Technology is a tool, a means to an end. When a business adopts any new technology, it must “serve” the mission of that business. Failing to do so, is a sign of either picking the wrong technology, or not having the right expertise to correctly utilize it.

The other concern when it comes to entirely relying on the instantaneous availability of technology is the probability of the opposite! What would a business do in case of a power failure, a major software crash, a loss of connection to the intranet (the business’s own internet, sometimes called Virtual Private Network (VPN); a tunneled network that securely rides over the public Internet)?

Here are some guidelines concerning the “marriage” between business and technology:

  • What is the business about, regardless of “how” it’s going to reach its objectives?
  • Who are the “people”, human beings, whom will run that business?
  • Does this business need to rely “critically” on any technology? what is the percentage?
  • What is the technology strategy? One that is “derived” from the overall business strategy, not the other way around, even if the business is all about “making” technology. In other words, a hi-tech enterprise
  • Do we have, in-house, the expertise to select, procure, install, configure, test and run the technology we need, or do we need to outsource it?
  • Risk management: Document, in details, a Standard Operating Procedure (SOP) to follow in case of a technical malfunction, no matter how small. The overarching objective is to keep the business running, at its best, and keep customers happy
  • Have we considered implementing five nines High Availability (99.999 % HA)? There is no such thing as 100% availability, but five nines is close, yet not enough, alone

The list could go on. Add to it what’s relevant and specific to your business.

This article is an invitation to be aware of the wonders of technology, its limitations, and the best approaches to utilizing it for the good of a business.

The author loves technology and comes from a scientific/technology background, yet the misuse of a wonderful tool turns it from being an ally to becoming and adversary…

 

The Wealth Maker

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Go Slow


Rushing is a form of greed. We can’t squeeze in a moment more than what it unfolds to offer. What does that mean? You might ask.

Each and every moment is a medium of expression and interaction. Our attitudes determine the way we interact with those moments, but nothing can “change” the nature of a moment, and what it has come to offer.

When it comes to investing, this is so rewarding, even if you can’t observe its effect immediately.

“Go slow” is not a synonym of “be lazy”. It’s an invitation to be mindful of your vision, objectives and actions.

Take your time researching a potential business; read, analyze, and discuss, but never rush to a decision under the pressure of timing the market. That strategy has proven to be misleading, at best…

Once you reach a decision, and you become ready to act, then go for it, do not delay. Here you can be bold and swift.

Now you have planted the seed. You can’t sit next to it and repeat: “Grow, grow, …”. Can you do that on a farm? Can you speed up natural processes, skip a season, harvest in February and plant in September?

The same principles apply across the board, in each and every human endeavor.

Your seed is the “wonderful business” you’ve mindfully invested in. Go slow! Learn to wait. Cultivate patience. It pays in droves at the right time.

How do you know if it is time to harvest? When the business ceases to be “wonderful”, or when it has already produced a handsome return. Before you sell, though, you should have already completed the same research process on another business, in which you intend to reinvest the profits from selling the first business. You need to have liquidity as part of your portfolio, but don’t leave too much sitting around, doing nothing (actually un-invested money becomes a burden, over time, as it loses some of its original value due to inflation and other factors).

Is that boring? You bet it is! But boring is better than losing, isn’t it?

Refrain from buying and selling for the sake of having fun and excitement. Find another venue to satisfy that desire. Investing isn’t a game to be played. It is a discipline to be followed…

Good Investing!

The Wealth Maker

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Enlightened Work


 

Over the years, I have come to believe and realize, that in order to reap the tangible and invisible fruits of work, one must provide real value to others. Something he or she feels proud of. Something that coincides with the principles that person believes in, and knows to be true.

The rewards are numerous. Money and the riches are but one of them. How about “peace of mind”, “healthy self-esteem”, “an elevated sense of spiritual content”, “deep satisfaction”, and happiness, to name a few?

Yet, above all comes a unique connection with The One who Blesses us with the gift of work! The ability to go out in the world and create positive change, without expecting gratification from our fellow humans. Rather, we look up and say: “Thank You for making me a channel, through which You Provide some of Your Bounties!”

It is possible to make money in today’s world without offering any value in return. Moreover, it is possible to make a lot of money by spreading harm and misfortune.

By choosing to be an enlightened wealthy being. By choosing to create wealth and value, you benefit yourself, as well as all around  you.

What is real value? That is something you need to identify. It is not the same for everyone. A farmer provides value by producing quality food. A doctor by eliminating disease, and so on.

Find something you love to do. Check its validity against your principles. Learn all you can about it. Set an intention to excel at it, and then move into that direction with all your energy. That is success!

The Wealth Maker

 

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Life Without Money – The Roles of Money


 

The last post seemed to have opened the Pandora box! Life without money!? Are you out of your mind? Nobody actually said that, but I could read it between the lines.

Yes, life without money, why not? Things, by their very nature, are replaceable. People, on the other hand, are not. The social/emotional crises that sweeps across most Western societies has something to do with this simple fact. Most businesses “cling” to things and let go of people. An employee is referred to in the “books” as a “cost center”, while a desk is an “asset”! Wow! How had we come down to this? No wonder our economies are “soft” nowadays.

Well, maybe I got a bit emotional there. I’m not suggesting that we throw money out of the window overnight, then fall into an even bigger disaster.

Changes of such magnitude take decades, if not centuries. But everything starts with a single idea. If any of you lived to see that happened, please remember yours truly!

Then how would we approach this idea? How would we explore it? I suggest we start by understanding the role of money in our lives.

It is easy to realize that money plays multiple roles, all important. Let’s start with the obvious one: An instrument to facilitate the exchange of benefits and value among people. What does that mean? A company needs the right expertise to build specific products. A group of Engineers have that expertise. There is a potential for benefit exchange and creation of value here, but what is the facilitator? Yes, money. You know the rest of the typical story: As the engineers create the desired value, they receive the benefit in the form of money.

What else? A discriminator. Imagine the price of a first class ticket from Vancouver to Auckland was the same as the price of an economy class ticket; who would travel economy? The carrier would run into a multitude of problems. Money, right now, is the only instrument to “discriminate” among passengers, forcing them to choose what fits their budgets.

And? A controller. In a business joint venture, the party that invests 51% or more has the final word in any dispute. Even in families. In some cultures, after high school, the boy or the girl has to go into the major that her or his father (or mother) chooses, simply because the latter is going to fund the expenses.

Finally, an organizer. Let’s take traffic as an example. When you exceed the speed limit, you run a chance of getting a ticket, in other words, pay money. Consequently, you adhere to traffic laws, and we end up with an organized, smooth flow of vehicles across the city, and over the highways.

We covered the role of a motivator in the previous article, despite the fact that money is not very good at that role. It performs it rather forcefully and negatively!

I guess that should be enough for now. Will carry on in the next post to see what would be an alternative that could satisfy all the above roles and more. Or maybe shift the whole paradigm, and spread the discussion to other fields such as sociology, psychology, policy, etc…This sounds complex, but let’s take it one step at a time.

In the meantime, let’s keep making and growing wealth, the usual way 🙂

The Wealth Maker

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Life Without Money!


 

Can Life continue without money? The concept of money is so ancient. Over the ages, it has taken many forms. Nonetheless, the essence has always been the same: An instrument to exchange benefits.

Have we taken money too far? Have we given it a priority it does not deserve?

Let’s entertain the above idea. You walk in a supermarket. You pick all the stuff on your list, and you just leave! How would the owner of that supermarket get the supplies? The same way. His/her suppliers would send their trucks full of goods, unload, and leave!

Apply this to everything. Then the question becomes: Why would people work to produce the goods and services required to sustain a society? Let’s find another motivation. If the household does not need money to survive, then there should be another inclination that would pull  the caregiver of that household off the bed every morning.

What is it? Although money has always been a motivator, yet a nasty one. It’s a negative motivator most of the time. Because of that, a lot of workers fall prey to anxiety and depression in their struggle to make ends meet.

What would be a positive motivator? Something that would make us “want” to work, not “have” to work.

Another example might clear the picture a bit. Here’s a fresh graduate from an engineering school. He went into that career because since he was seven years old, he loved to build “things”. Now he’s got the knowledge under his belt. He “wants” to apply what he’s learned.

Companies do not provide any money. Instead, they offer a top-class work environment, and the chance to work on stimulating and challenging projects. Everyone comes to work to make things happen. Nice, eh?

Now you might ask: How about those lazy workers, who prefer the warmth of the bed over this “great work environment” thing? They end up in a “work boot-camp”. What if they refused to join? I don’t have an answer to that.

The above is food for thought. I may end up writing a book to take this idea to the next stage. For the time being, I’d welcome any comments or suggestions.

 

The Wealth Maker