Just over four years ago, I felt I had a big enough Engine to stop working for money and let my Mini-Me do it for me (if I dramatically cut my expenses). I wanted to focus on things that didn't involve money. Like writing. A lot of that writing has focused on promoting financial security through people building their own Buffers (mini-Engines) and Engines. I am also a Universal Basic Income activist, and believe we could build 150-person Engines called Community Wealth Funds that could pay out 150 UBIs.
One big difference between me being a Breadwinner, and relying on my Engine is the way my Engine gets paid. A Salary is like a Bond. Your employer borrows your labour, and pays you interest (the salary). The employer gets to keep the value you create, but you get the certainty of a regular salary that is quite sticky. Since inflation became a constant feature, people expect salary increases. We get upset if those salary increases are less than inflation. We would get super upset if our boss actually decreased our salary.
My Engine is invested in real businesses. Shares are a fractional ownership of bigger companies. You are an owner, and you don't get a salary. Some Shares pay dividends, but typically that is a smaller part of where the returns come from. A good business would rather re-invest that money in new opportunities. If the owner wants money, they can sell shares.
The challenge is a share price is an estimate of the future earnings of the company. An educated guess. Jeff Bezos, for example, doesn't have a big pile of gold like Scrooge McDuck. His guesstimated worth of $159 Billion is predominantly invested in Amazon. This means that money has been put to work, and that is a guess of the present value of all the money that is going to be made. Like if someone guessed an amount that would be worth the same as all the salary payments you are going to get in the future. If you stopped working, that number would plummet. So would the number 159 if Amazon stopped Amazonning.
Similarly, my Engine doesn't pay me as consistently as a paycheck. If you think of it too literally as a human Breadwinner, you would get nightmares. Some years (like this year so far), my Engine shrinks rather than growing. Some years it earns more than my paycheck would have been. This can be stressful.
Similarly, my Engine doesn't pay me as consistently as a paycheck. If you think of it too literally as a human Breadwinner, you would get nightmares. Some years (like this year so far), my Engine shrinks rather than growing. Some years it earns more than my paycheck would have been. This can be stressful.
There is absolutely nothing wrong with earning a Salary. I am not a 'we are all slaves to the machine' anarchist wanting to burn everything down and dance around naked on the burning embers. Although that sounds fun, you wake up in the morning.
I am a deep pragmatist. The best investment approach for each person, and the best choice of what work to do, is very individualised. There is no one size fits all model. I know that investing in businesses, like being an entrepreneur, is far less glamorous than it sounds.
The most successful business owner I know says it took him seven years to earn what he was earning before he broke out on his own. Seven years. And he was successful.
Always remember all advice people give is really advice to themselves. Listen. Question. Then find a solution that works for you.
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