i have to make money

[appealmogs]

i have £500 that i can spend, what should i spend it on with a strong roi

 

[ZyzzReincarnate]

@Seth Walsh might know how to help

 

[Mast]

.

 

[Seth Walsh]

i have £500 that i can spend, what should i spend it on with a strong roi

The mistake is treating £500 as a portfolio allocation problem.


At £500, you do not have enough capital for the return on capital to matter. You have enough capital to potentially change the stochastic process generating your future income.


If you make 20% on £500, congratulations: you made £100.


If £500 buys you a skill, tool, credential, piece of software, distribution channel, transport, or access that moves your earning power from £12/hour to £20/hour, the payoff is not £100. It is a permanently altered stream of future cash flows.


This is where people misunderstand ROI because they think in ensemble averages instead of time averages.


A bet can have enormous expected value and still be terrible for the person taking it if losing materially damages his future ability to keep playing. Your objective is not to maximize:


E[wealth next period]


Your objective is closer to maximizing the long-run growth rate of the process you personally remain inside.


That changes everything.


With £500, I would ask:


1. What prevents ruin?
If losing the £500 leaves you unable to pay for transport, food, phone, rent, job interviews etc., then the highest-ROI use may literally be keeping it liquid. Survival capital has an enormous shadow return because it preserves every future opportunity.


2. What creates convexity?
Buy things where your downside is capped at £500 but your upside is not capped at £500. A useful technical skill, equipment for a service business, software that automates work, a domain + product experiment, sales infrastructure, qualifications required to enter a better labour market.


3. What increases your number of trials?
Taleb's point about optionality matters here. You want many cheap experiments with limited downside and occasionally very large upside, not one £500 heroic bet where you need to be right.


4. What permanently raises the drift of your personal wealth process?
Cutting a recurring £50/month expense is effectively a £600/year return. Increasing income by £5/hour over 1,500 working hours is £7,500/year (BUT THIS IS BEFORE TAX). Compare those numbers with trying to outperform the S&P with £500.


People obsess over finding a 100% return on £500 when they should be trying to create a 10% increase in the productivity of the human generating the next £500,000.


At low levels of capital, your primary asset is not your money.


It is the mechanism that produces money.


Protect the mechanism from ruin. Increase its drift. Add convexity. Preserve optionality. Then, when the mechanism starts producing excess capital faster than you can productively reinvest in yourself, financial compounding becomes the dominant game.


£500 invested at 10% is £50.


£500 that changes the trajectory of the person holding it can be worth orders of magnitude more.


Do not ask “what should I invest £500 in?”


Ask:


“What £500 intervention most favourably changes the dynamics of the system that generates all of my future wealth?”


That is the actual ROI question.

 

[appealmogs]

The mistake is treating £500 as a portfolio allocation problem.


At £500, you do not have enough capital for the return on capital to matter. You have enough capital to potentially change the stochastic process generating your future income.


If you make 20% on £500, congratulations: you made £100.


If £500 buys you a skill, tool, credential, piece of software, distribution channel, transport, or access that moves your earning power from £12/hour to £20/hour, the payoff is not £100. It is a permanently altered stream of future cash flows.


This is where people misunderstand ROI because they think in ensemble averages instead of time averages.


A bet can have enormous expected value and still be terrible for the person taking it if losing materially damages his future ability to keep playing. Your objective is not to maximize:


E[wealth next period]


Your objective is closer to maximizing the long-run growth rate of the process you personally remain inside.


That changes everything.


With £500, I would ask:


1. What prevents ruin?
If losing the £500 leaves you unable to pay for transport, food, phone, rent, job interviews etc., then the highest-ROI use may literally be keeping it liquid. Survival capital has an enormous shadow return because it preserves every future opportunity.


2. What creates convexity?
Buy things where your downside is capped at £500 but your upside is not capped at £500. A useful technical skill, equipment for a service business, software that automates work, a domain + product experiment, sales infrastructure, qualifications required to enter a better labour market.


3. What increases your number of trials?
Taleb's point about optionality matters here. You want many cheap experiments with limited downside and occasionally very large upside, not one £500 heroic bet where you need to be right.


4. What permanently raises the drift of your personal wealth process?
Cutting a recurring £50/month expense is effectively a £600/year return. Increasing income by £5/hour over 1,500 working hours is £7,500/year. Compare those numbers with trying to outperform the S&P with £500.


People obsess over finding a 100% return on £500 when they should be trying to create a 10% increase in the productivity of the human generating the next £500,000.


At low levels of capital, your primary asset is not your money.


It is the mechanism that produces money.


Protect the mechanism from ruin. Increase its drift. Add convexity. Preserve optionality. Then, when the mechanism starts producing excess capital faster than you can productively reinvest in yourself, financial compounding becomes the dominant game.


£500 invested at 10% is £50.


£500 that changes the trajectory of the person holding it can be worth orders of magnitude more.


Do not ask “what should I invest £500 in?”


Ask:


“What £500 intervention most favourably changes the dynamics of the system that generates all of my future wealth?”


That is the actual ROI question.

high iq reply.

i have a question, what would you do with £500, since you sound very knowlagable

 

[ZyzzReincarnate]

strong roi tbh

 

[Seth Walsh]

high iq reply.

i have a question, what would you do with £500, since you sound very knowlagable

I would just keep it, if someone were to give it to me.

I would save it even though I've pretty freakishly high savings. Since AI is in the process of demonetizing labour; what'll matter in the future more and more is just having capital.

But I need to know you're balance sheet for this to map onto you. We most certainly don't have the same balance sheets, fixed costs, debts, incomes etc.

But since income will become more fragile in the age of AI, optionality and pure capital mass will matter the most.

I already answered what you should probably do with 500GBP. I'm assuming you live at home and are in your teens.



I think we're at a time in the world where simply HAVING the money, might matter most. See what you really need that for. Gym membership for a year is not a bad way to use the 500GBP.

If you are thinking in terms of "invest it" "trade with it"... then, goodluck - you will find out the hard way.

 

[Gudlifer]

The mistake is treating £500 as a portfolio allocation problem.


At £500, you do not have enough capital for the return on capital to matter. You have enough capital to potentially change the stochastic process generating your future income.


If you make 20% on £500, congratulations: you made £100.


If £500 buys you a skill, tool, credential, piece of software, distribution channel, transport, or access that moves your earning power from £12/hour to £20/hour, the payoff is not £100. It is a permanently altered stream of future cash flows.


This is where people misunderstand ROI because they think in ensemble averages instead of time averages.


A bet can have enormous expected value and still be terrible for the person taking it if losing materially damages his future ability to keep playing. Your objective is not to maximize:


E[wealth next period]


Your objective is closer to maximizing the long-run growth rate of the process you personally remain inside.


That changes everything.


With £500, I would ask:


1. What prevents ruin?
If losing the £500 leaves you unable to pay for transport, food, phone, rent, job interviews etc., then the highest-ROI use may literally be keeping it liquid. Survival capital has an enormous shadow return because it preserves every future opportunity.


2. What creates convexity?
Buy things where your downside is capped at £500 but your upside is not capped at £500. A useful technical skill, equipment for a service business, software that automates work, a domain + product experiment, sales infrastructure, qualifications required to enter a better labour market.


3. What increases your number of trials?
Taleb's point about optionality matters here. You want many cheap experiments with limited downside and occasionally very large upside, not one £500 heroic bet where you need to be right.


4. What permanently raises the drift of your personal wealth process?
Cutting a recurring £50/month expense is effectively a £600/year return. Increasing income by £5/hour over 1,500 working hours is £7,500/year (BUT THIS IS BEFORE TAX). Compare those numbers with trying to outperform the S&P with £500.


People obsess over finding a 100% return on £500 when they should be trying to create a 10% increase in the productivity of the human generating the next £500,000.


At low levels of capital, your primary asset is not your money.


It is the mechanism that produces money.


Protect the mechanism from ruin. Increase its drift. Add convexity. Preserve optionality. Then, when the mechanism starts producing excess capital faster than you can productively reinvest in yourself, financial compounding becomes the dominant game.


£500 invested at 10% is £50.


£500 that changes the trajectory of the person holding it can be worth orders of magnitude more.


Do not ask “what should I invest £500 in?”


Ask:


“What £500 intervention most favourably changes the dynamics of the system that generates all of my future wealth?”


That is the actual ROI question.

nigga just tell him to gamble

 

[Seth Walsh]

strong roi tbh

You need to always ask "What happens to me if I'm wrong?"

Can one bad move wipe me out?

 

[ZyzzReincarnate]

You need to always ask "What happens to me if I'm wrong?"

Can one bad move wipe me out?

Wipes me

 

[Seth Walsh]

nigga just tell him to gamble

Make him gamble now so he can pay rent to me later.

 

[ZyzzReincarnate]

Make him gamble now so he can pay rent to me later.

just relax bro

 

[Seth Walsh]

just relax bro

NEVER