My Understanding of Riches

April 12, 2020

I want to be rich. I never really hid this fact rather I am pretty open about this goal. How money flows interests me and is the reason why I am minoring in Economics at UBC. Originally, I hated Economics in high school. I found the concepts taught to be basic and mundane. What will studying and drawing demands and supply graphs of apples and oranges going to do for me? Money and economics were all boring until they clicked. It was a game; an unavoidable lifelong game.

A Game of Cashflow

I believe in order to become rich, you must play the game of cashflow. When most people think of becoming rich, they simply think about the cash they will hold onto or the their “net worth” in the future. That’s a nice thought but not a productive one. In order to be rich, you must increase your positive cashflow. In fact, I believe everything in economy is about cashflow and trying to maximize it. What does this entail? There are boundless possibilities as to how cashflow is created. From the most common method of employment, to more mysterious method of financial tools such as stocks, options, and more, civilizations have been creating cashflows since the days of Roman empire consciously or unconsciously. So what’s the point of having a cashflow? Maintaining a net positive cashflow means that you can consume indefinitely (note: not infinitely). I think that’s amazing and want to achieve such feat since I am a lazy and greedy. The idea of doing nothing and consuming pleases me. How we achieve such feat is the game we play.

Understanding Economics

Economics is a study of economy. As Gateman taught me in ECON 101, economics, specifically microeconomics, is the study of efficient allocation of scarce resources between alternative uses fulfilling unlimited wants. I think this definition is a great definition of economics highlighting the limited and the unlimited. Economics is about doing the impossible; Fulfilling unlimited wants with limited resources. With the idea of achieving the impossible, let’s talk about how to be rich.

How to be Rich

This is the question everyone probably wants the answer to: How to be rich. I will be honest. I do not know how to be rich. I only have ideas of what other people have told me. Commonly told to secure a good job and live frugally. Sure that’s great but I ask what’s the point then. The whole point of money is to consume not survive. Money is supposed to be value in exchange for goods and services. If we wanted to just live, we’d all be farmers not doctors, lawyers, engineers, or businessmen. But we don’t, we look for a career that allows us to contribute back to the society allowing the cumulative utility gained to grow. Hence, I want to be rich enough to consume luxuriously. Regarding how to be rich, I have thought through numerous ideas from lemonade stands to doing stock options yet I am not sure.

This realization of wanting to rich was rather recent. When I was younger in third grade, my childhood role model was Thomas Edison. Inventors, I thought, create inventions such that are so innovative that change the world. I wanted to be a part of that. Growing up, I come to realize something else. Thomas Edison was not just an inventor. He was also a businessman. He was a talented businessman. A business is a system/process created to facilitate net cashflow. Upon realizing this, I knew I wanted a business of my own. I am still not sure of what very kind of business I want. I am not sure if I have the talent, the personality, and the grit to achieve a successful business. But I know I will have a business. Although the businesses are great idea, I am still unsure due to the risk of them. As for any risks, we want to mitigate and reduce the risk as much as possible through insurance or other means. My insurance is a career in software engineering. I love coding and would have continued coding regardless of the price tag attached to it. However, I honestly wouldn’t have been too invested in it as much without the tag. I’m greedy and I want my business and my career. It’s a lot of things to do. Talking to experienced business(wo)men and experienced career(wo)men, they tell me one thing: Pick a ladder, you cannot climb both ladder at the same time. I agree with the sentiment of this. Yet, I am still torn because I want both; not sure what to invest into.

With the current events of COVID-19, the worldwide stock market has been tanking a lot. Along with this, the news is filled with investing news in terms of which stocks are to buy and sell right now. Investing is a very simple idea that has been twisted so much by the modern world that no one agree on what it is. In my opinion, investing is using current accrued valuables in exchange for future recurring valuables. Whether your investments are dividends, rents, stocks, bonds, etc, they are simply put positive cashflows. Students invest over $100,000 into education, some even going in debt in order to do so. Is it worth it? What do you gain out of being “college-educated”? The gain is the $X amount you earn from your college-educated job minus $amount you’d earn from not college-educated job. In my case of Computer Science, I think it’s probably worth my time and money to invest such amount.