There’s a vital lesson in life that not everyone learns: never be stupid. Since this is a precept of life and is the duty of the money sector life classes, it is a shared value. So what is “never being stupid money”?
Let’s start with an unconventional statement: cash is the simplest thing to get. To be clearer, if a corporation wants to raise capital to develop, there are countless financing options. And there are a lot of “stupid cash”: investors who want to invest their cash in anything “sexy” to say they have a component of it. I hope this message prevents anyone from falling into the “stupid effective” trap.
What is “stupid money”? “Stupid money” refers to investments made through Americans that provide capital without offering any additional value, such as experience, industry knowledge or strategic vision. These investors look for high-risk corporations or modern opportunities without fully understanding the company or evaluating the dangers. Worried. They are often drawn by the lure of top prospective returns or the thrill of caring about anything “sexy” like a startup or flashy project. However, because they do not have the ability to give a contribution beyond their monetary contribution, their investment may be temporarily depleted and their returns diluted, leaving them vulnerable to significant losses.
This is what happens in practice:
There are countless stories of clients, friends, or acquaintances who’ve been pitched what sounds like a great investment opportunity. It might be a startup raising seed money for the next big thing, whether it’s a breakthrough medical technology or a new food chain making waves in another country. These opportunities are often described as “promising” and “game-changing.”
So what’s the challenge with those investments? That’s precisely what stupid money is like. Remember, any business can generate income. The key question is: what does the investor bring besides cash? In those situations, they simply fund someone else’s dream without providing anything that adds genuine value, such as experience or industry connections. Money alone is not enough.
When a lawyer, doctor, or anyone else in a high-income career says they need to invest in a Broadway show, a new sneaker technology, or a cutting-edge product, the same query merits being asked: What’s in it? ? Them at the table? The answer is usually not money.
The truth is, those other well-meaning people are turning their hard-earned money into stupid money. Even if business takes off, two outcomes will most likely occur:
Look no further than the story of Facebook and Eduardo Saverin, one of its co-founders. Despite his early involvement, his stake was drastically reduced, illustrating how even someone with a significant role in a business can end up with far less than expected.
There is no get-rich-quick scheme. Investing good fortune has much more to do with knowledge, skills and being a strategic player than it does with taking on a new and interesting idea.
This does not mean ever to invest in a business. It’s about making sure it’s not a fool in cash. For example, it makes sense for a lawyer to invest in a legal technology startup or that a central surgeon invests in medical technology. In those cases, they supply price beyond cash: they supply experience, wisdom of industry and capital.
On the other hand, a lawyer will not give the production of a Broadway show. If someone is hunting ahead to make a harder cash investment, it is greater for anything more established and proven, such as the inventory market. Possibly it would not be the sexiest option of the next cocktail, but it offers a much greater possibility to gain effective, or at least not lose everything.
Next time one of these off-the-wall opportunities comes along, simply say no thanks and avoid becoming the dumb money.
This is one of those kinds of life to follow: stay smart, remain strategic and maintain your wealth, your physical condition and your happiness in balance.
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Diversified, where our mission is to uncover and achieve your life’s goals, so that we can bring true happiness to as many people as possible. I believe in building a firm that can satisfy all our client’s needs under one roof. I’m a CFP and a nationally recognized author that is passionate about helping people reach their retirement goals and attain happiness. I’m a regular contributor at Kiplinger and Forbes, and I’ve been featured in the Wall Street Journal, Barron’s, FA Magazine, USA Today, US News and World Report, CNBC, Today and TD Ameritrade amongst others. My nationally recognized blog focuses on retirement and how finances tie into the pursuit of happiness and fulfillment. I have a BS in Finance in addition to my series 6,7, 63, and health/life licenses, with both Certified Financial Planner and Certified Estate Planner designations.