My father is an ordinary farmer, he is a bit conservative and extra careful. Perhaps this is affected by the difficult years in the past that have printed too deeply.
He often discourages ace in risky activities, promotes safe activities such as: Being a teacher, avoiding stock stocks. Yet he was quite supportive of the general merchandise trade.
When I was quite young, my father told me about "VAC - Garden of Stages," to quote:
In VAC, the garden is always the top, pond with barn can be profitable, but the risks that come with it are huge.
Ponds are average cost, but the risk of disease is not small.
The barn is big cost, big risk of disease, it is the worst thing so ranked last in the other 3.
There may also be outbreaks in the garden, but the cover is also lighter, in addition to the cost of the garden, it is always smaller than a pond with a stable.But the general risk of price does not say, because each is the same. We will give specific examples:
You have a garden of growing longan this year, you are just a little hungry, next year is OK.
If you have a fishpond, you will have a relatively small loss, but it is relatively affordable, so you are still forced.
You have a pigsty with dead epidemics, because the cost is too large (barn, food) and you can easily carry a debt. Not to mention the cost of reinvestment is very high seed.
It was the safety mindset in investing I learned from childhood. In fact, my father did not actively teach me this, he analyzed it in the gossip of the meal when a neighbor built a row of pig stables.
The second problem is passive income.
My garden is quite large, because my father passed from the field to a young age. When I asked him: Why doesn't Dad plant anything else, and grow areca?
- Because areca only takes initial investment time, then many years can be harvested at almost no significant cost. Later, Dad will get older, how can he be forever, then have to have money to eat.
This is the most basic form of passive income, the passive income I envisioned in my mind. We want to relax when our health is worse, we must have a source of income that is not high, but must be stable, with little effort for care and operation.
System & scaling
My father did not have much money, he told me, "The children of the future can do multiplication, but the father is old and slow, can only do addition." But when I look back, I see he combines the passive income with the scale up, accidentally and very simply.
First, he chose a perfect passive income model, areca tree fulfills the criteria for a good passive income: Stable, extremely low care costs and less labor. Although the profit per tree is not so prominent.
Thanks to a model that was so low-cost, he easily spent his time and mind increasing the number of trees. Assuming that the first 10 trees were planted, there was almost nothing to do, he planted 10 more trees, the process kept repeating like that over many years and he was working on his own rather than hiring anyone. There are many models for high profits, but the cost of time, management, and operation will be a huge cause leading to unable to scale.
As time went by, the number of trees increased, and it was important that he did not have to work on it, but simply planted new and regular trees and old ones just left there. This year, the price of areca nut, with more than 3,000 grown areca root since he was 18 years old, it earned him nearly 600 million of income per year. A very successful figure for a farmer, not a big deal, just a gradual accumulation of small amounts of sources.
There is a little difference between scaling combining good passive income and expanding the usual scale:
Let's say you run a restaurant, scale up into a restaurant chain, how is this different from my dad's story?
It may seem the same, but it is different because the restaurant business to achieve the second level of operation without the first one is very difficult. When scale up, the safety & pressure it affects you will be very clear, summarized in the sentence: Big boats have big waves. It is different from the above story:
Suppose: There are 100 trees to get 20 million, 150 trees to 30 million, any more money, the more money, the safety and pressure when 500 trees still look like 100 trees.
How have I applied these in my field?
**** For examples of personal reasons these examples are for illustration only ****
I am a very lazy person, the things I do originally come from doing the least work. Suppose that if you build a website (earning revenue from ads) I don't like news or trends, although it brings a large number of instant readers, but it's not something I love because I just stop working. or update, I'll be hungry again. I like the array of knowledge, because it is very sustainable. Five years later, no one may be interested in Son Tung MTP, but he still has to find out what his stomach ache should eat. So I try to choose the businesses that require the least investment.
The difference is just like planting a tree, if you have a 360m2 garden, you will be diligent in planting vegetables according to seasonal care and sale, which is definitely more profitable than areca tree, but I easily scale up to 3000m2 areca, but you are not easy to grow. Where is 3000m2 of vegetables.
There are 2 projects as follows:
- Project A invested VND 100 million, earned VND 3 million a month, doing almost nothing.
- Project B invested VND 100 million, it takes 4-5 days a day to collect 20 million / month.
When we start, we have no capital, we are forced to follow project B. Simply plow hoe and take money, until there is surplus, we will take strong interest in project A. We do not can do 20 hours a day to do 4 projects B, we can only do 8 hours / day. So we can only do 1 project B combined with project X. The number of X depends on the specific and the capital you accumulate. When you run a large machine that can replace you to scale up project B, then you are a very good businessman.
That is also why investment funds are created, the profits are not large, but safe, and you do not spend time and effort for it, you can still work normally, which is the form of increasing income. extremely effective.
More advanced, may include building paid services by month. There may be many different services, but when there are customers paying by the month, more customers are that customer, the old customer tries to maintain it, sometimes up to millions of customers pay monthly, the amount of money is not thought. . Technology companies are strongly shifting from one-time purchase to monthly subscription such as Adobe, Apple, MS, Amazon or television companies, game companies such as PS, Xbox, magazines and even Google with Google Red. With Forex, for example, when there are 100 ref active active 1, that revenue is sometimes better than you trade. You trade peak, it still has a threshold, but you do the service, it is almost unlimited. Of course when there is quality, good monthly payments for both users and suppliers, on the contrary want fraud who will encourage one-time payments. 1 course type 30 million or 1 BTC, because fast trick also falls.
Conclusion: Addition, make a small income, but it is stable and effortless. You still wholeheartedly committed to doing the old thing but, after a few years looking back, you will see "long time is full of ants".
P / S: This article keeps feeling like writing does not express well what I want to say, only then "Letters are endless, words are endless."
Hoai Phong
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