Yesterday, I was doom scrolling on Instagram - which I don't recommend - and came across one of those posts going viral about a hypothetical situation where you must choose one of two things. In this case, these were the choices:
1- You get a 50% discount on anything you buy, but there is a catch: if you sell that thing, you can only sell it for the same price you bought it for or less, so you cannot, for example, buy a 1 million dollar house for 500 thousand and sell it again for 1 million.
2- You get 50 cents every time you hit a punching bag. You can punch it as lightly as you want.
Usually, I don't like to waste time thinking about things that have no connection to reality, but this particular case sounded like an interesting thought exercise on the difference between short-term gains and long-term gains.
Option 2 sounds very attractive, and as I read the post, I imagined most people would immediately pick that. Checking the comments on the publication confirmed that.
I mean, who wouldn't want that? Even if you only spend a few hours punching a bag daily, you can make thousands of dollars per month. I've worked jobs much worse than that for a fraction of the money.
This option has one problem: it doesn't scale.
You can choose to spend the entire rest of your life punching that bag, but one thing doesn't change: no matter how fast, strong, or resilient you are, there are only so many hours in a day, so eventually, you will max out your income. I'm not even accounting for the fact that, as you age, your ability to punch that bag, no matter how lightly, will most likely decline.
We will get back to this, but let's look into the first option briefly.
For the sake of this post, I'm ruling out some workarounds to the rules that some people suggested in the original post, such as buying half-priced assets for a friend or relative and getting them to sell it for you in return for a commission. That is a grey area, but the choice only makes sense if things like that are banned.
Even then, this is a great choice. Cutting all of your expenses by half is very significant in any context. Plus, if you are smart, you can start investing in all kinds of assets that generate revenue that is not dependent on their sale price and, therefore, don't break any rules.
You can start small with high-dividend stocks and work your way up to bigger investments, such as real estate.
Sure, in most cases, this will be a much longer path unless, of course, you are already very wealthy, but, as you can probably imagine, once you get things rolling, this option snowballs out of control because it scales much better than the punching bag situation.
And by now, you might be thinking "But I can also use my punching bag income to invest!" and while that's true, it once again showcases the biggest limitation of this option: scalability.
What I mean by that is once you get some seed money to start investing, punching the bag begins to have diminishing returns. Let's say you make 1 million a year by punching that bag (arbitrary number), and after some time, you start making 3 million a year from your investments alone. Would you still spend your time punching that bag for 1 extra million? What about when you are making 5 a year? Or 10? Remember that, no matter what, your "punching bag income" will never scale.
See what I mean? As you become more wealthy, your cool "superpower" loses appeal.
That doesn't happen with the other option because in the world we live in today, there is always something more expensive for you to buy, so being able to cut the price of anything in half stays significant forever. It scales indefinitely.
Ultimately, you can't go wrong with either. It's a matter of making a lot of money very fast, which is very powerful on its own or taking a much slower path that will scale extremely in the long run. Personally, I like the long-term option better simply because it has cooler mechanics and I really believe it's much more powerful after a long time but the reality is none of this matters because none of it is real.
I kind of hate myself for spending so much time even considering this completely hypothetical situation and I'm sorry I put you through the same ordeal but, in the end, I had some fun in the process so it was not a total waste.
But what about you? What would you choose?
Posted Using InLeo Alpha
