How do you make a lot of money as a man? If you ask most people they’ll give you two answers. Either you start a successful business, or you trade stocks risking your own money. Those are your options.
It turns out that there’s a third way – and it is often much more effective than either of these two strategies. It’s called managing other people’s money.
Investing Other People’s Money
Currently, there’s a massive industry out there catering to just this. A lot of wealthy people with cash to invest don’t have the skills to do it themselves. Instead, they hand over the work to professionals with the right skills and just leave their money to grow.
Everyone wins in this situation. The client gets a bigger return than they could, were they to invest their money themselves. And the money manager gets a nice two percent fee every year on whatever cash they invest – which can be a lot.
What’s impressive about this phenomenon is that it doesn’t actually require a considerable amount of work if you have a winning strategy. So long as you know where to put your clients’ investments, you’re often able to make a lot of money with relatively little effort. It’s mostly passive.
Please note, though, that you must have a winning strategy. Clients will expect you to beat the market consistently. If you don’t, they won’t be willing to pay your fees, and you’ll end up in the cold.
Before you embark on an ambitious project like this, you’ll need to consult various resources for brokers. You may also have to apply for a license, depending on your jurisdiction. But once you get set up, you’re ready to roll.
Managing Other People’s Money Is Free Leverage
Imagine if you wanted to invest other people’s money in the stock market to leverage your returns.
Without them voluntarily giving it to you, your only option would be to go to the bank for a loan. The bank would charge you a high rate of interest, cutting into your returns and massively increasing your risk.
But when people hand over their money willingly, it is an entirely different situation. You don’t have to pay them a rate of interest (they pay you). Plus, you get control over their capital, allowing you to make money out of it.
This method is the way that the majority of wealthy people in banking and finance make their money. They don’t actually risk their capital – they risk that of the people who buy their services. And it is an extremely potent strategy.
If you run the numbers, you soon see how fabulous this strategy becomes.
Imagine if you take $1 million under management and charge a fee of 2 percent per year.
In this situation, you make $20,000 per year passively. If you grow your client’s capital each year, you’ll continue to earn higher and higher fees, and attract more business. It snowballs. In a few years, you could have $10 million under management.