But now you have to add an assumption: that the investor in question is either very lucky or is smarter than other investors, such that he can spot such opportunities. Neither of these is necessarily within our control.
I get where you are going with this, I really do, Ohai. It’s not incorrect. The Original Poster is basically saying, “I don’t want to work like this forever.” But, he wants to maintain his high paid lifestyle. (I’m with him, I think we all are) I do not think that you need to work hard, the way many of us do, to make a lot of money. I also think that you do not have to have a job where you are constantly competing to keep your job in order to make a lot of money. Isn’t that why some people put in 100 plus hours a week, because if they don’t someone else will and snatch their job? Yes, wouldn’t it be better just to cash out at some point and park your money in something that you are the boss of (can’t get fired) and work at your own pace? Not everyone can stay in the finance and investment industries forever. Most of us will quit it by the time we are in our 40’s. Wouldn’t it be nice to get that noose off your neck? To know that you had a decent income generating business on the side that could support you and potentially your children if they are not smart enough for a finance job or if they industry ceases to exist by the time they are adults. It’s diversification of your income streams actually. So if we want to be purely theoretical, won’t that simple act of putting your capital in something unrelated to “finance” probably reduce the volatility and standard deviation of your personal return? I have a lot of friends that own apartments in cities like london and rent them out to other people. This gives them a source of income should they lose their own jobs. Your success will largely depend on this skill that you are talking about in “spotting opportunities” or managing whatever business you buy. But at least you won’t be competing with 20 year old asian math geniuses. 20 year old asians. don’t own hotels… yet.
you guys overcomplicate everything. Don’t think of it as spend little and earn big. Think of everything as: more risk = more potential reward So you buy crummy land, slap a space rental on it collecting income. Well the risk of loss and failure is high, but if it works, you get more reward. If you buy good land, and do the same, you get little risk with little reward, or none at all. I would say the real advanatage is first mover. Where something has not been tried yet, but after analyzing everything, you see a good chance at something no one thought of yet. But you need capital to make it work. Most people are not ready to risk everything on an idea without some backup plan or security just in case it fails. That’s why the rich get richer. With plenty of funds to try new ideas, like VC you only need one winner even if you funded a bunch of failures. I know that’s my goal. Once I have a guaranteed life + retirement ready for me, all the excess capital I have will go straight to pursuing what I want to do: restaurant + vineyard
Sport Clips has been running radio ads looking for people to open new franchises. They specifically mention that you don’t need any prior experience and don’t need to be active in the management of the franchise. No idea what the buy-in amount is though. Vending machines are a lot more work than you think. No comment on the other things.
Lending Club.
Buy houses where hipsters or students do not live yet but are likely to. Rent. If there is already a vegan coffee shop in the neighborhood, then even better. Or, just rob a bank if your risk tolerance is higher.
Only if you can find a bank worth robbing.
That’s why I’m pursuing a CFA charter - it’s the Gold Standard in bank robbing certifications. The problem is that I think the boys from Goldman et all got to the Fed first. Party’s over. Might as well go home now.