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Wednesday, 27 June 2012

The key to riches: high re-investment rate

Posted on 22:00 by Unknown
I got a very good comment to my Marie Antoinette post. My return on investment (how much ISK I make from 1M capital) isn't especially high, but I have an insane re-investment rate and that explains my really high income.

I mean I made 72B and spent only 3.6B on anything but making more money: 1.5B on playing for free on main for myself and my girlfriend, 1.1 spent on the Logi/Triage pilot and 1.0 on the titan pilot. The rest of the money were spent on creating more money in some way (trading, Rorqual industrial, selling a Nyx pilot). That's 95% re-investment rate.

The most obvious advice that any rich person would give you is: "spend less than you earn and invest the rest". If someone makes just $30K a year and invests 33% of it into a 5% yearly profit instrument, he'll be a millionaire in 37 years, so if he does it in his active life, he has a really nice pension fund. If someone makes $100K and settles with living on 20, investing the rest, he'll be a millionaire in ten years, and will have a 9M pension fund.

Most people don't invest so much and prefers to live a wealthy life now. Also, real life has must-be costs as you must eat even if you know that a dollar saved today is 7 dollars without any work by the time of retirement. In a game there aren't such costs. You can save almost all of your income. Most people just don't. They spend it on whatever they like or stop generating wealth when their wallet isn't empty.

Of course I'm not advocating my 95% reinvestment rate. But 50% is a reachable amount. To keep the books easy, I'd suggest a dedicated seller alt who lives in Jita. Such char can be near-maxed from 500M SP and a day running around for standings. You contract the ore, mission loot or whatever you gain by your moneymaking profession to this char. This char sends half of the income back to your main for spending. The other half stays there and only used for investments made to help you make money. It doesn't matter what way you use to make money, you'll see your income skyrocketing after this. For example you were mining but after you saved half income, you could soon start a second account for an Orca pilot who boosts, holds ore and protects your Hulk by shield transporters. If you were missioning, a logi second account can increase your income greatly. The point is to spend every second ISK you earn on the process of earning more. Soon you'll have more than you can spend.


Thursday morning report: 69.1B (1.5B spent on main accounts, 1.1 spent on logi, 1.0 on Titan, 0.5 on Rorqual, 0.9 on Nyx)
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