moneyFYI
Financial Freedom Is Merely Organized Common Sense
The Easiest Money Making Plan
People think there is only a brilliant invention or new business that can make real money. While that would do it, it is not the way to bet. No new business and no new invention wins immediate favour and vast profits. The ancient idea is, “Build a better mouse trap, and the world will beat a path to your door.”
The better mousetrap might make you rich but being better alone won’t do it. It must be priced well, be easily available, and really be better. By the time you get the marketing in place, the financing, and the manufacturing capability, it will have been reverse-engineered in China and be available on the internet for 50% of what you think you need to make a profit.
While mousetraps are cruel to mice, the marketplace is cruel to those who come unprepared.
Giant businesses tend to be the ones who were not products and which are capable of grabbing a huge market share before their competitors can get organized to compete. If you can dominate a market fast enough, patents, trademarks, and copyrights will be available but mostly redundant.
Startups are infinitely more complex than you might think. Peter Thiel’s book, Zero to One, will give you some insight.
Don’t depend on lightning strikes for success.
The sure thing
Economist John Cochrane makes a point that is irrefutable. You could use it to make some easy money. Governments and many businesses could use it to make a lot of money.
“Fixing dysfunction is a visible achievement that works right away, with no short-run cost.”
Sometimes it is as seasy as replacing bank-offered mortgage life insurance with twice as much coverage for less money. Other times it is exploring ways to finance cars, and homes better. Over-saving and under-saving are both problems, a little arithmetic goes a long way to making it better.
The easiest way to make money, reliably every month and after taxes, too, is to spend better. How many small charges appear on your credit card every month because you have not discontinued forgotten and unneeded subscriptions? Most people have two or three of those vampires.
Be true to little things, and you will find it is a big thing.
Suppose you can find, with some effort, $250 per month. Putting into a tax-free savings account at 6% and increasing the saving by inflation over thirty years, you accumulate $351,000. If you earn 6%, then that’s $21,000 a year of spendable money. A nice vacation every year without touching the capital.
The bit to takeaway
It costs nothing to stop doing something you should not be doing. A little here and a little there, and you have turned a small saving on interest costs, intelligent deductible decisions on car and house insurance, and money for unneeded software, magazines, and newsletters subscriptions, into something that is pleasant and valuable. How many cable channels are unused at your house?
If you want big money, you must find something costly that you are doing that doesn’t need to be done at all. Peter Drucker has it summed up this way, “There is nothing so wasteful as doing something with great efficiency that should not be done at all.” Every business has something they can pay others to do far cheaper than they do it or can cancel entirely. Could you think of anything the government could stop and no one would miss it? Think what fixing dysfunction is worth there.
Give it a try. Even if you don’t find much or don’t invest the savings, you will feel good about yourself.
I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software startup, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning and business matters. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Federal Business Development Bank.
Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.
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