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by kh14n07 on February 6th, 2005

kh14n07

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Why does it take money to make money?

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Answers. 12 helpful answers below.

  • by ... on February 7th, 2005

    ...

    .

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  • by StickMaker on February 6th, 2005

    StickMaker

    It doesn't. This is an excuse for the lazy to "explain" why they are broke all the time. I've proved the point.

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  • by mdamone on February 11th, 2006

    mdamone

    Actually, it doesn't. With a footnote.

    While often it does take money to make more, it doesn't have to be YOUR money. In reality (in modern capitalist markets) it is actually RARE to find anyone who has made a significant amount of money using only their own to start.

    This is because making money is ultimately a matter of 'leverage,' or doing more with less (a 'lever').

    Even employees use leverage to make money: they 'leverage' their knowledge, skill, labor, etc. into making money. The larger the 'lever,' or knowledge, skill, labor, etc., generally the more the potential for making money.

    In the world of investing, it is very possible to make money with no money. No, I am not referring to any 'get-rich-quick' infomercial. I am referring to 'personal assets.'

    A 'personal asset' is something that you invest in order to make money. It does not have to be money itself. It can be something else that you can 'trade' for money. Here is an explanation:

    Common to the investing world are partnerships: people getting together to share risk and pool resources (personal assets) in order to get a return - money.

    Some may come to the partnership with money to invest. But others come in with other assets just as, if not more, important. These can be experience or knowledge in the area that the partnership is trying to make money.

    These are the three most common 'personal assets' partners bring in to create a money-making venture: money, experience and knowledge. For example, 3 people want to start a business together...to make money.

    Person A has money to invest. He/she lends the partnership the money.

    Person B does not have money, but has experience with this type of business or field. He/she can offer something very important, needed by the other two people..other than money.

    Person C does not have money, either. But person C has knowledge needed by the other two people. Maybe it is a technical skill, or knowledge of other people in the field that will be helpful, etc.

    Why the partnership example? Because if you want to make money, you will likely need to bring in at least ONE of the above 'personal assets' to your money-making efforts.

    If you do not have money, you will have to offer experience (something you already know how to do, or something similar, etc.) or knowledge (ideas, people connections, know-how, OR simply knowing HOW to gain the necessary knowledge).

    You will find that if you possess, or develop, just ONE of the above 'personal assets,' you can find someone to 'lend' you the other two in order to make money....for a cut, of course.

    As a note, many successful investors in all areas of making money will tell you that there is a difference between "making" money and "creating" it.

    Not coincidentally, you will also find that those who have 'made' the most money have learned how to "create" it, not "make" it.

    If you want to read about some people who learned how to "create" rather than "make" money, read the stories of Henry Ford or Fred Trump (Donald's father). They literally learned how to "create" money from nothing: the highest level of investing.

    Why is this the highest level of investing? Because the skill is far more valuable than the result.

    As the saying goes: "Give someone who has never had a million dollars the money and they will lose it all. Take a million dollars away from someone who has made it themselves and they will make it back very quickly."

    So you see, it DOESN'T take money to make money. But the footnote is: you just better have some other 'personal asset' to invest.

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  • by The Ghetto of Town on February 14th, 2005

    The Ghetto of Town

    It takes money to get money because you have to invest in something and maybe get something back, like stock, you put money in it is like a gamble you might make some or you might lose some.

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  • by Astaroth on February 8th, 2005

    Astaroth

    In a money driven society, the power of capital is almost everything. Is what is called the "Cost of Opportunity", which means having the money to take a profitable opportunity, before others or from a position of competitive advantage.

    Money gives "big-league" investors the power to spread their risk. This means that instead of having "all the eggs on the same basket", you can invest in different businesses with different risks levels and profit levels. If one of them goes bad, it compensates with other that cover their expenses with expectations to grow. Or that several not so successfull ventures generate the cash for the very successfull one.

    You can have big money on the bank, making more money, while investing other money on stocks with different risk levels, while going on different business ventures to invest your profits.

    At the end is a geometrical effect...if you are business savvy enough.

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  • by Tommy12oz on February 7th, 2005

    Tommy12oz

    WOW i have a great idea for ...." a new sports bar"..."a new product"..."for some underpriced realestate"......now im gonna go out and make millions...wait i dont have any money to open the bar..create the product or buy the land....darn


    Also you have 10 million...earn an obtainable 5% a year on it you'll have 500,000 withour ever touching the 10mil.

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  • by Relsqui on February 6th, 2005

    Relsqui

    The implication is that earning money requires investing some, e.g. in materials to manufacture something which is then worth more than the sum of its parts. Also, making more money than one already is could mean hiring more people or expanding your capability to produce in other ways, most of which take money.

    This depends somewhat on how you're trying to make money, of course, so whether you believe it or not is up to you.

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  • by Anonymous on February 6th, 2005

    Anonymous

    "Why does it take money to make money?"

    Unless you believe otherwise that it doesn't, this will be the reason you will not.

    It takes....

    CREATIVITY.....a plan.
    ACTION......apply your plan
    PERSISTENCE....stay focused, adjust course when necessary.

    Time is the most precious of resources. Procrastination is the killer of time.

    No excuses, DO IT NOW.

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  • by thatsJustme on February 12th, 2010

    thatsJustme

    labor and attitude....

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  • by LEO on January 24th, 2010

    LEO

    that's a lie

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  • by Yarnlady is happy every day on September 23rd, 2008

    Yarnlady is happy every day

    I believe the basic premise of this questions is flawed. People can make money even by starting with zero.

    However, to answer why money makes money, in most cases several people with only a small amount of money can put it together and rent (loan) the larger amount to other people. they then share the rent they make (With money, the rent is called interest)Those with money are the landlords, and they collect from the ones they rent (loan)it to.

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  • by DudeLer 2 on September 23rd, 2008

    DudeLer 2

    the copy machine is really expensive. the cost for proper paper is outta sight. ink is expensive. good help is hard to find.
    .
    you could sell something and make money. if you have internet savvy you could sell on ebay. you could be an agent and sell stuff for other people.
    .
    you could work and make money. its like selling your body, your muscles, your mind.

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