a bird in hand, or two in the bush…

bird in hand

bird in hand

OK, think fast: two jobs. One pays $50,000 this year; it will have a steady raise keeping pace with inflation (more or less) for the next 20 years, but there will be no spectacular bumps up. The other job pays $15,000 this year. In 10 years it might give you the experience to make $100,000 per year – or, if you haven’t done that well, it might pay you $15,000.

What do you do?

I would argue this is at the core of your personality for many reasons. If I told you that I would give you $5 straight out, or we could flip a coin and heads you’d get $10 or tails you’d get $0, what would you choose? Investing works the same way: conventional thinking tells us that index fund investing is the way to go. You can’t beat the market! Hang in there – there has never been a 15 year period where the market didn’t go up! Be average – hope for the swelling tide to lift you along with the rest of humanity! Bet on the sure thing – take the $5!

So what does that tell you? Do you want to make money now or make money later? Would you take a job for free today with the promise of making more tomorrow? Or do you want cash in hand, thank you very much? Honestly, both are legitimate arguments. I’ve turned down two jobs in investment banking because they were bonus-based compensation and I knew that even though they might be worth 150% of what I was making from contracting, they also might be worth 70% of what I was making. You know what? That’s weak thinking.

Risk taking is fundamental for wealth building. I’m sure Warren Buffet would argue that he doesn’t take any risks: he studies exhaustively and then invests without concern because he’s done his homework. My grandfather did awfully well (until 2000) in the stock market, too, although he certainly didn’t have access to the type of research that WB does. It’s possible to take some measured risks and achieve success as long as your definition of success doesn’t mean being the wealthiest man (or woman) in the world.

I want to make money in the future. I’ve set up my lifestyle to make money in the future. I claim to want money in the present so I can retire now, but I spend a lot of time talking about making it now and coasting along on a decent contracting income without building my investments aggressively or a business or even my own knowledge (which deteriorates every day).

Here is the question: what’s the main thing you need to do? Invest better? Build a business? Or just continue to slowly build income and plow your increasing income – through maintaining your standard of living and putting the excess into savings – into slowly building wealth? One of my favorite reads is was Get Rich Slowly (I don’t feel it’s worth reading anymore), but do I want to get rich slowly? Depends on how slowly you mean…

Photo Attribution Some rights reserved by “G” jewels g is for grandma

3 comments

  • I’d try to get both the job that was making $50K, and invest my ‘off’ time in the other one, and then flip if the other one started making insane amounts of money. It’s been hard for me to learn that the time that I put in does not necessarily equal the money that I’m going to get out – the risks that I’m taking seem fairly minimal because it’s one thing after another after another. Thank you for this post! 🙂

  • Great post…I have always been more of a ‘live for today’ kinda guy…so needless to say my 401k looks a bit weak (amazed I have one). If both jobs were identical and I was passionate about the work, Id like to say Id take the risk for the bigger payday later on…but in reality Id probably play it safe (due to current economy). Something to think about for sure…thanks!

  • Hi Steve,

    I just have a question about something you’d mentioned in another article, from maybe 2008 or so, “How to make money without a job.” (The comments were already closed there.) At the end you mentioned a promo code for Dream Host, “good for a free domain registration.” I am just curious as to if this is just for the domain or if I have to buy hosting along with it? I really can’t afford much more than ten bucks a year right now (lol, I’m only 15), and could probably get by for the time being with something like affiliate links on a Blogger hosted site if I could just point my Google site to a domain. They don’t let you use the freebie ones anymore because I think people were gobbling them up for, well… less than reputable purposes, to say the least. 😉

    I don’t like Blogger’s “next blog” function at the top of the screen. I think that goes away if you have your own domain, though. A freebie dot-com for a year wouldn’t be bad to help me get off the ground a little bit. I’m just wondering if that code lets you just have a free domain or if you have to pay for hosting and then get a free domain along with it. :-\

    Appreciate any help you can give me. Thanks in advance 😀