Best Money Making Method 2: Invest

The second best way that you can make money is to INVEST. You can get paid very well for investing.

The question is when you invest, what is it that you get paid for?

If you don’t know that, you can’t accelerate it, multiply it, and make it bigger.

So, what is it that you get paid for when you invest?

Risk.

In investing, you get rewarded for the risk that you take!

You get paid for taking a risk that somebody either doesn’t want to take or can’t take. So, when you put your money in the bank, are you taking a risk? Yes.

How do you know? How do you know that there is risk when you put money in the bank?

Because they pay you!

If there were no risk, you would have to pay them for watching over your money. But they will pay you interest for putting money in the bank, because they will then loan your money out to other people, and they don’t want to take the risk of loaning their own money.

Bankers are very smart. They take your money and loan it to somebody else and they collect interest from the people to whom they loan the money; and they pay interest (less than they collect) to you and keep the difference.

They are willing to pay you for taking the risk.

Now the risk is not very high, so the interest rate is not very high.

It is one, two, or three percent in America right now.

What we often get taught when we are taught about investing is that you should minimize your risk. Hmmm. Now, risk is the only thing that you are getting paid for; so that is like most people going to work and minimizing their work. It is the same idea, right? So, if you minimize your risk, you are minimizing your reward.

If you minimize your risk, you minimize your reward!

What you really want to do in investing is maximize your risk. You want to maximize the risk that you get  paid for taking by taking risks that are easy for you to take but difficult for others.

See, not all risk is equal to each person.

Not all risk is equal!

There are some risks that I am very willing to take that you might not be willing to take.

If a lot of other people don’t want to take that risk, but it is OK for me, I can get paid a lot of money for assuming that risk.

I will give you an example. There is a type of risk that is called volatility risk. Volatility risk is the risk of the value moving up and down. Now, as long as it is going up over time, do you care? As individuals, do you care if on Friday you’re down a bunch as long as on Saturday you are up a bunch? It doesn’t really matter to you that much, right? As long as you know that sometime in the future you are going to have the  financial situation you want, you don’t care about volatility.

But if you work in a corporation, and you are in the treasury department, do you care? Yes. You care a lot, because if the investment is down on the day that you have to close your books and declare the current value of the investment to your shareholders, you lose your job.

So, it is easier for you as an individual to take volatility risk than it is for a corporate treasurer to take volatility risk.

You want to find types of risks that you can specialize in. Then you want to take as much of that risk as possible, so you get paid as much as possible.

Find an area of risk where you enjoy a competitive advantage.