How to Make More Money… Simplified

Andy Snyder|September 28, 2021

This is why we can’t do anything nice.

We were invited to Penn State to speak to a group of students about entrepreneurialism. How could we get in trouble, we figured. It would be a simple, in-and-out speech.

We shook hands with the chancellor, said hello to a few important folks (we were the first speaker in their new building) and stood to the side to listen to our introduction.

Then it came to us… a joke.

“With an introduction like that,” we said as we took the stage, “our name should be on one of these buildings. But I just checked… It’s in the girl’s bathroom.”

Apparently, college has gotten a lot more serious since we graduated. And the man in charge is still cranky.

But we had a good time anyway. We talked about how we got where we are… what matters most (hint: it’s not education – another rough spot with the chancellor)… and some of the tough lessons we learned.

We droned on for 45 minutes or so and then got to the good stuff – the questions.

It was time to see if the crowd was really paying attention and if we’d done our job… if we’d gotten them excited about risking their time and money on a project entirely their own.

It was one of the last questions that proved our success.

“Do you have to be an investor to be an entrepreneur?” a young girl sitting up front asked.

We gave her one of our T-shirts as a prize. It bought us a few seconds to polish our response.

The Answer to It All

Hating wishy-washy answers, we refused to say something like, “It depends.” So we told her the most important words in the world of business.

Just like every fairy tale starts with, “Once upon a time,” every business plan must start with, “Money goes where money is treated best.”

That’s the key to getting rich – whether you’re starting a company… or investing in one.

We gave some super-simple examples to make our point.

Say you’ve got $10,000 to start a company. Doing the math, you calculate you’ll get a 3% annual return on the cash. It’s super reliable and will take just a few hours of your time each week.

It sounds like easy money.

But what if you have that same $10,000 and an idea that will lead to a 15% annual return?

That sounds much better, right?

Hold on… There are a few more variables – like time and risk. Perhaps it will take 60 hours of your week to earn that cash. And maybe it’ll be a 0% return this year… and a 30% return next year.

Is your money really being treated any better? It might be better just to work for somebody else… and risk their money.

This is the core conundrum for all entrepreneurs. The equation is made simpler when interest rates are ultra-low and money is cheap. But there are still trade-offs.

It’s no different with investments.

There, too, money goes – and must go – where it’s treated best.

Simple Concept… Big Payoff

Shares of Pfizer (PFE) may return only a fraction of what shares of Tesla (TSLA) have over the last five years, but we can set a watch to Pfizer’s 3.5% dividend… and enjoy about a 10% rise in shares each year.

There’s hardly any risk of getting in at the top… or of having the company’s CEO tweet away our profits.

The stock with the lowest risk for each unit of return will ultimately prove the better choice.

So yes, to be an entrepreneur, you must be a good investor. After all, you’re investing your money into a business… just like a shareholder is.

But the inverse is true too.

To be a good investor, you must be a good entrepreneur. When you invest in a business, you must understand how that business works… what risks are involved… what costs come with the return… and, above all, how your money will be treated.

In our eyes, investing and entrepreneurialism are not all that different.

A successful investor treats his money like it’s going into his business. When he does, it treats him well.

It’s a simple idea that may not get our name atop a library anytime soon.

But we’re okay with that.

It’s already in all the right places… like right below this line.