I have learnt about this concept in my sales days and I find it very useful in many parts of our lives as well.
In Sales, there are 2 main ways to do it (imo):
Value - Sell the high value ($) items . Eg. Product A is $10, Product B is $20 and Product C is $50
Selling 1 unit of Product C is equivalent to selling 5 units of Product A
Question is - Selling Product C may require a slightly different sets of skills and require a longer time to close it
Volume - Here, we are talking about the frequency of sales. So, you focus on as many units of Product A sales as possible to make up the total value you want , ie $50.
Applying this to investment -
Value - We can group IPOs , Cryptocurrencies and selective stocks that jump a few hundred percent returns a day! However, this is highly risky and the risk/reward ratio may be too high for some to stomach it. IPOs as we have seen are hit and miss kind of game as well. Not all are rosy and you end up holding a bag of losses which may take years to recover.
Volume - Here, you can increase the profitability of the game through your volume, ie. number of contracts or shares you hold for the investment. Many think that if they do not have huge capital NOW, then they will not partake in the game of investment. My take is simple, you can buy in staggered amounts at different times OF the same shares. For example, I love many China stocks like Alibaba, Tencents, Meituan, to name a few and have bought them at different price levels. I merely keep my position size (volume) the same.
Applying this to your career :
Now, most of us have a job and sometimes it takes a toll on our time and health that we have no energy to do other things, investment amongst one of them.
Value - you can term this as the outcome - is it gaining knowledge , experience , a stepping stone to the desired company/industry, good pay package, etc
Volume - Here , I merely measured it by the number of hours you put into it to generate the value.
Hypothetical case - you earn $5000 a month and you worked 40 hours per week so your hourly rate is 5000/40 which gives you $125/hour.
3-5 years from now, where would you want to see yourself ? 200/hour , 500/hour ?
When asked this question to some of my friends, they say job market is unpredictable and with COvid-19 , it makes it even more hazy. I agree to disagree.
By planning and committing to a financial goal, you need to work towards it. And that is having a plan. If you rely 100% on your active job for income, then seriously, you are also increasing your risks as well. Would your job be made redundant or would they downsize ,etc ?
Investing to me is one of the BEST way to reach the financial goal. Think of it as having multiple freelance jobs - one of which is researching the industry/companies and making decisions to ride on the trend. And even if you are a Noob, there are plenty of ETFs and low cost investment that offers you decent amount of returns without excessive risks on your part.
Volume in terms of hours is KEY. Because that is a finite resource. We all have 24 hours a day, whether you are Jeff Bezos or the janitor in a restaurant. Nobody can use money to buy an extra minute for the day! So, it is FAIR. What appears UNFAIR is how the rich make use of their time to gain even more value ($) for themselves. So 1% return on a 10m investment compared to 1% return on a 100 shares of Apple from 2 different investors would yield different returns (value terms).
Our lives are not only resided in our career, we still need time for our family, social lives, personal hobbies, community, spiritual, health, etc. We can find many articles of people who spent endless hours on their work only to endanger their health and others along the way. Worth it ? You think about it.
If you are in your 50-60s now, yes it is true that you can't turn back the clock to your 20's and start investing. But hopefully, your life experience would prepare you to be a more patient and rational investor instead of acting on impulses and acting irresponsibly with your money. There is always a trade off.
So, there you go, Value and Volume Approach to Life and I hope you use it wisely to benefit yourself and others as well.
In Sales, there are 2 main ways to do it (imo):
Value - Sell the high value ($) items . Eg. Product A is $10, Product B is $20 and Product C is $50
Selling 1 unit of Product C is equivalent to selling 5 units of Product A
Question is - Selling Product C may require a slightly different sets of skills and require a longer time to close it
Volume - Here, we are talking about the frequency of sales. So, you focus on as many units of Product A sales as possible to make up the total value you want , ie $50.
Applying this to investment -
Value - We can group IPOs , Cryptocurrencies and selective stocks that jump a few hundred percent returns a day! However, this is highly risky and the risk/reward ratio may be too high for some to stomach it. IPOs as we have seen are hit and miss kind of game as well. Not all are rosy and you end up holding a bag of losses which may take years to recover.
Volume - Here, you can increase the profitability of the game through your volume, ie. number of contracts or shares you hold for the investment. Many think that if they do not have huge capital NOW, then they will not partake in the game of investment. My take is simple, you can buy in staggered amounts at different times OF the same shares. For example, I love many China stocks like Alibaba, Tencents, Meituan, to name a few and have bought them at different price levels. I merely keep my position size (volume) the same.
Applying this to your career :
Now, most of us have a job and sometimes it takes a toll on our time and health that we have no energy to do other things, investment amongst one of them.
Value - you can term this as the outcome - is it gaining knowledge , experience , a stepping stone to the desired company/industry, good pay package, etc
Volume - Here , I merely measured it by the number of hours you put into it to generate the value.
Hypothetical case - you earn $5000 a month and you worked 40 hours per week so your hourly rate is 5000/40 which gives you $125/hour.
3-5 years from now, where would you want to see yourself ? 200/hour , 500/hour ?
When asked this question to some of my friends, they say job market is unpredictable and with COvid-19 , it makes it even more hazy. I agree to disagree.
By planning and committing to a financial goal, you need to work towards it. And that is having a plan. If you rely 100% on your active job for income, then seriously, you are also increasing your risks as well. Would your job be made redundant or would they downsize ,etc ?
Investing to me is one of the BEST way to reach the financial goal. Think of it as having multiple freelance jobs - one of which is researching the industry/companies and making decisions to ride on the trend. And even if you are a Noob, there are plenty of ETFs and low cost investment that offers you decent amount of returns without excessive risks on your part.
Volume in terms of hours is KEY. Because that is a finite resource. We all have 24 hours a day, whether you are Jeff Bezos or the janitor in a restaurant. Nobody can use money to buy an extra minute for the day! So, it is FAIR. What appears UNFAIR is how the rich make use of their time to gain even more value ($) for themselves. So 1% return on a 10m investment compared to 1% return on a 100 shares of Apple from 2 different investors would yield different returns (value terms).
Our lives are not only resided in our career, we still need time for our family, social lives, personal hobbies, community, spiritual, health, etc. We can find many articles of people who spent endless hours on their work only to endanger their health and others along the way. Worth it ? You think about it.
If you are in your 50-60s now, yes it is true that you can't turn back the clock to your 20's and start investing. But hopefully, your life experience would prepare you to be a more patient and rational investor instead of acting on impulses and acting irresponsibly with your money. There is always a trade off.
So, there you go, Value and Volume Approach to Life and I hope you use it wisely to benefit yourself and others as well.
Comment:
Those who are patient and followed my trade call last year would be happy to know their commodities are doing well.