all you college drop outs...

[BraveJayhawk]

[ QUOTE ]
... just use a broadly diversified portfolio... the power of compounding interest will double, triple, or even more radically increase your nest egg!... keep the rest in something short term and highly liquid, or use it to play smaller stakes poker, live off of rakeback... most important thing here is to take some short term risk for a longer timeline and ALLOW THE INTEREST (% growth) TO COMPOUND ON THE INTEREST!

[/ QUOTE ]

Do I even need to elaborate? I will restrain myself from commenting and return back to rolling on floor laughing (ROFL for those who like to abbreviate)

FYI

Broadly diversified = more than one

[fish2plus2]

"It is possible to make an absurd amount of cash in this way. 25K is about the minimum you would need. Just buying a business or a piece of a business could give you a nice income stream, but so would other investments that require less work. Think about the stock market. A diversified portfolio can average 9%+ per year without a ton of risk. You'll want more than that from your business since owning a single small business has more risk. There are a lot of externalities to consider. (What if the employer of most of your customers goes out of business or downsizes?) Another pitfall is finding out exactly how much work must be performed by the owner? A business may look good on paper, but if you buy it and find out you have to spend 20 hours/week making decisions because the employees aren't competent, then its less desirable. Once you have what you think is a good business that will stick around awhile, and require less of your time, then paying for 15% returns may be worth it to you, since you know you can only get 10% in the stock market.

The way to really make money however is to find a small business that could be improved in some way, and quickly. I'll give the example of my friend who owns a doggy daycare. He purchased the doggy daycare for 90k. It was profiting about 18k/year. At the time, the daycare only did daycare for dogs. He added a loft to his building and placed some kennels up there in order to add a boarding service. Now about 18 months later, his boarding business is 50-75% of his total revenues, and requires little extra overhead (no extra space, limited extra staffing) since the dogs are just kenneled all night, so he is making about 40k/year now just from adding boarding. He is also working on a partnership with a groomer to add some more revenues with effectively 0 extra costs. Once he is clearing about 50k/year, with the same 5x valuation he had before, the business has increased in value to $250,000, for a profit of 250,000-90,000 = $160,000, plus the 60k or so that he made during the 2 years he'll have owned it. Selling a business for $250k is a little more difficult than selling for $90k, so even if he can only get $200k for it, he'll still make about $150,000 total in two years.

Compare this with buying a parking lot coffee shack. You have limited options to expand the business of the coffee shack. Maybe if they aren't selling food, you could add some food items to increase sales, but a lot of these places already are doing that. You'll essentially only be able to get growth from the growth of the community around you. The real money to be made is identifying those small businesses where you have an opportunity to increase sales in some way, or increase the efficiency (easier) of the way the business is run so that you can rapidly increase the profits and turn around and sell it for a lot more.
A lot of people who own small businesses just sort of fell into it, and never tried to fully realize their business's potential. A lot of profit can be made here.
Max"

[catalyst]

[ QUOTE ]
gabe - I think the 11% includes inflation. So if I invest $100 this year, and it is worth $110 next year then it may seem I made 10%, but if inflation was 8%............

[/ QUOTE ]

First, inflation won't hit 8% year over year in the United States barring a severe repression. The average yearly return of the Dow Jones since its inception is ~11%. Inflation will certainly hurt your nest egg, but compounding interest is far more powerful. Assuming a return of 2-3% is absurldy low unless you are investing like an idiot.

[AZK]

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IMHO anybody with $500k, and enough intelligence to have earned that money through poker, should never have to work again if they don't want to.

Couldn't agree more

[/ QUOTE ]

Couldn't agree less. I don't know. There are a lot of people on this board that have made 500k. A lot of them are [censored] retarded (be it mentally or socially - enough so that success won't come as easy as online poker success). Poker is not difficult. These are the same people that think 1-2M will be fine for life. Get real. I don't know about you guys, but I am [censored] expensive. If I could "live" off 1-2M a year eating ramen noodles and not working a day in my life, or I could work, and eat at the palm, go on vacation, buy a few cars, etc, I'd take the work option any day. Notice the quotes around life, because doing what is described is a pretty miserable way to live once you see what is really out there. I'd rather kill myself. Seriously. "Real work" (though I've never really had any) is not that [censored] bad if you are interested in it. I mean some of the posts on this board make me sick at the apathy and stupidity of the top money making posters on this site. Does nothing really interest you guys except sitting on your ass all day 8 tabling?

[Isura]

Good post AZK.

[ABCheckRaise]

One of the things about having tremendous success in something is that it often comes with the expectation that everything else will be easy. This is espescially true with very, very smart people, like the ones on this board.

For those of you who want to be entrepreneurs, I applaud you. Starting with capital gives you a HUGE advantage. But before you start a business on your own - the equivalent of a noob sitting down at a 50/100 NL table, it might be worth talking your idea through a bit...

I'm not nearly as good a poker player as most of the people on this board. I scratch out $5K/month playing 2-4 NL in my spare time... But if you want to be an entrepreneur, I may be able to provide some guidance. I'm 31. I went to Wharton undergrad, and spent 5 years as a venture capitalist (where I invested about $50 million in 10 companies). When I was in college, I started a half a dozen small businesses. After my venture days, I also started a successful guidebook publishing company which I sold for a decent chunk of change. After getting an MBA at Columbia, I was recruited to be the CEO of a venture-backed entertainment company, which I've run for the last year or so.

I undoubtedly am still in the bottom half of the income distribution on this board - sick. But, my point is this: I understand and value the abilities that a great poker player has. I also know an awful lot about starting businesses. I'm happy to give anyone who is interested a hand. I don't want anything in exchange (except maybe some poker advice)... And I'm certainly not going to move to Miami and steal your concept to breed salmon and crab into a tasty new meat, or whatever it is. Let me know if I can help.

Send me a pm if you want to talk...

[Ellsworth T]

Take my entire life savings/bankroll/sell my house/my car/all my property and put it on roulette twice. On red.

[j_allstar]

[ QUOTE ]
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Do you do this?

I was thinking more along the lines of owning a home type of appreciation. Of course buying rental properties can be a good investment. It does take some work though - just like anything else.

[/ QUOTE ]

The hard part is finding the properties. Right now with how much prices have gone up, it is very difficult to find anything that you can rent out for more than the mortgage price. As prices come down, interest rates go up, rental prices go up and single mothers working at Wal-Mart who can't afford their mortgage payment go busto... I think there will be opportunities for this, and I can't wait to do it.

[/ QUOTE ]

amen to busto moms who will make us rich!

[/ QUOTE ]

ya, feels sorta predatory to be waiting for that...but they are the ones who overextended themselves and took out ARM's they couldn't afford.

[/ QUOTE ]

With all due respect to degan (and i have a lot for him), this kinda made me sick...

[snowbank]

[ QUOTE ]
[ QUOTE ]
IMHO anybody with $500k, and enough intelligence to have earned that money through poker, should never have to work again if they don't want to.

Couldn't agree more

[/ QUOTE ]

Couldn't agree less. I don't know. There are a lot of people on this board that have made 500k. A lot of them are [censored] retarded (be it mentally or socially - enough so that success won't come as easy as online poker success). Poker is not difficult. These are the same people that think 1-2M will be fine for life. Get real. I don't know about you guys, but I am [censored] expensive. If I could "live" off 1-2M a year eating ramen noodles and not working a day in my life, or I could work, and eat at the palm, go on vacation, buy a few cars, etc, I'd take the work option any day. Notice the quotes around life, because doing what is described is a pretty miserable way to live once you see what is really out there. I'd rather kill myself. Seriously. "Real work" (though I've never really had any) is not that [censored] bad if you are interested in it. I mean some of the posts on this board make me sick at the apathy and stupidity of the top money making posters on this site. Does nothing really interest you guys except sitting on your ass all day 8 tabling?

[/ QUOTE ]

AZK,

Ya, I agree that a lot of people on the boards don't know a whole lot about money and how to build wealth outside of poker. However, I think that these people have the ability to do this a lot easier than normal people, because of what it took to be successful at poker. Also, I think it takes a certain mindset and the ability not to feel that all investments are "risky", and poker players have these things. If they learn how to evaluate investments, they will obviously have an edge over the average person being able to live off $500k+. A lot of it depends on if they enjoy it though. If they don't enjoy looking for and making good investments, they probably won't be good at it like they were with poker because most became good at poker because it was something they enjoyed so they played a ton of it. If they did enjoy it, and learned from people making good investments I have no doubt they could live well off of $500k.