Ongoing Source

Building wealth takes time. 15 years is an aggressively short period to build an Engine (Capital that can earn enough to cover your expenses). Unlike saving with a picture of what you are going to spend your money on, building an Engine aims to build an ongoing source. You can’t build wealth without a source. You can’t build wealth if you consume everything that comes from the source. You DEFINITELY can’t build wealth if you consume more than what comes from the source (and live off increasing debt). Most people live hand-to-mouth. A few manage to build capital to finance their retirement. This will never change if we consume everything we produce. Time and space is needed. Establishing sources of wealth. Then creating space between our hands and mouths. Then giving proper time to let capital work. Till we can live off the fruit rather than shrinking the number of trees.

An Ongoing Source of Energy

An Ongoing Source of Energy

Active Career Management

Money laundering is when criminals try place their dodgy dealings in the financial system so they can spend it. A big part of the fight against this form of crime revolves around tracking the “source of wealth”. You don’t pitch up one day with two bags of cash to buy a Ferrari without questions being asked. Anyone living obviously beyond their means (spending more than they earn) is going to be suspicious. Unless they have a good explanation, and evidence. Rich generous parents or something other than the traditional “get a job” or “start a job”. Building capital requires a source. Bradley Shearer founded Protagion - Active Career Management in an analogous way to Fundamental Stock Pickers. The source of wealth is often very traditional. A job. A job comes with choices. Investing in continuous education. Identifying roles you want. Building the skills for them. Converting your skills into capital to support that. Protagion is hosting a virtual conference (#ProWeek) to explore some of the ideas. I will be participating in both an open panel on “financial independence and diversifying income”, and a smaller group discussion for subscribers focusing on my ideas around Financial Yoga.

 

Plot Twist

Be wary of averages and extremes. When making decisions about a path to go on, it is important to “think in distributions” and to think about what is not there. The range of outcomes, and what happens if it does not work out. The past (especially long histories) is incredibly helpful. Including similar histories, with slightly different contexts. Same, but different. There but for the grace of. The starting point for wealth creation is an income. A source. Researching how others have done it is key, but make sure you do not just look at the ones who have done well. Especially if you are the product. If someone is teaching you to make money like they did, but in reality they are making money by teaching you… that is just a Ponzi Scheme. Layers of teachers teaching teachers to teach teachers till all the teachers are taught. Talk to people doing what you want to do about the challenges. Lots of people. Not just the ones you are paying. Talk to the bitter and twisted. Do not take their word as the truth, but be aware. How can it go wrong? How can it go right? Build the capacity to cope with plot twists.

Finding a Match

The jobs that are safest from the threat of Artificial Intelligence replacement are those that don’t scale. Where “Same As” doesn’t work. Money is made, at scale, when you find a solution to a problem, a huge market with the same challenge, and a container that allows you to get paid. The money made by Walmart, Tesco, Sainsbury’s and crew as they rolled out the cookie cutter. Everyone needs to eat. Mostly the same stuff. 1-1 work doesn’t scale. You have to be there. It also means you are often charging by the hour. Charging for time immediately makes you directly comparable to everything else that charges by the hour. In the same way as any two things with a price can be compared. Time and Money judge all. Comparison and options forces down price. This isn’t a scalable business. Which ironically means it may be a great Basic Source. The need for someone to see you (specifically), and your needs (specifically), is incredibly resilient. The Economics are difficult. Difficult is a container. If you can build something that sneaks under the radar, and drip that source into building an Engine… the difficulty may shade the wind for your match.

Different Sources

You can’t build an Engine without a source. I picked a source from the menu. But not everyone has the same menu. I got a two-year work-travel visa in 1998-99 and considered my options while working as a waiter, night-porter, and teaching assistant. In the UK, the Jobcentre is part of the Department for Work and Pensions and delivers working age support-services. Helping with the menu. The National Minimum Wage is increasing to £8.72/hour in April. At the moment, that is about R170. Close to a day’s wages in South Africa at the lower end. Many things cost less in Rands, but being a Soutie (one foot in SA, on foot in the UK) punches you in the face with Global Inequality. The Gini Coefficient measures inequality. South Africa takes gold at 63% which is the same as Global Inequality (Lafuente, 2006). The worst country is the world’s self-portrait. Conveniently hidden by borders, distance, and Global Apartheid.

Human Hustle

Most of us, definitely including me, speak beyond our Circle of Competence. We extend our experience without full knowledge of the context. You don’t have to know how you did something to do it. It can be quite frightening seeing the general muppetry from “successful” people who stomp stomp stomp into other areas, once (narrow) success has inflated their Engine. What does seem to connect all of our attempts to make a living is human nonsense. Dealing with trust, interpersonal relationships, communication, and competing intentions. Another thing that connects the dots is hustle. I picked my source of income from a menu. When things didn’t go my way, I chose from a different menu. The people I admire are really good at honestly reflecting on their realistic options. Warts and all. They are good at communicating and building trust. They find out what needs doing, how to do it, and get it done. Some patience, less stomp, and more chipping away.

Holy Cow

Milk doesn’t come from the shops. It comes from Cows. Most of the products we now end up using are assembled from bits that come from all over the world. The words we use have danced off the tongues of hundreds of thousands of people as they criss-cross the globe. Sharing flavours. Bending structure. Breaking rules. What you see isn’t all there is. The problem with bowing down at the alter of the obvious, the conspicuous, and the evident, is it cuts us off from the stuff you can’t count. Quantitative Finance likes to boil decisions down to two numbers. Return and Risk. The problem is, you don’t actually get paid for taking risk. In the long run, you get paid for adding value. Value is a deeply complicated, often abstract, internal, personal, and relational story. It is important to regularly remind yourself where your milk comes from. To look for, and retain awareness of, the source.

A calf and a Sadhu