Ask HN: I made $24k over the last month. Now what?
But I'm facing another problem. I don't know what to do with the money, how to use this very large monthly income to actually make myself rich. The app store income is going to end soon enough - the ecosystem is pretty fragile. Now that I have this raw cash, no debts, have a job I enjoy, don't want or need a car, my apartment is perfectly comfortable, what can I do?
I do NOT want to invest in the stock market, or invest in anything long term like bonds or property. I want to somehow use the money to make more money quickly (within a 2 year time span). But I have no idea! What I know how to do best is the app store, but I want other type of things that do not require much time investment, but give as good returns as that.
What do I do with the money? How do I invest it in making more money quickly?
206 comments
[ 7.0 ms ] story [ 152 ms ] threadBut I agree: I doubt Max has as much of an advantage in evaluating promising targets for microloans than he has building software.
Have you thought about taking some of the income and using it to hire other developers to increase the number of apps that you've got being developed at once? It seems like you know what works and doesn't work on the app store, so it would probably make sense to start trying to make your efforts scale up.
things that i would add:
- consider just sitting on (some/most of) the money for a while. you don't need to make a big hasty plan and execute just because you have some cash to spend right now. thats not to say do nothing. just don't throw all your resources at something immediately just because you have the resources to burn.
- diversify. as you said, the app store won't be forever. try looking into other things that are either just becoming viable for development, or things that are going to be longer-lasting.
- pad your account. no matter what you do, there will be dry times and hard times. make sure you're good to go for that. stash some money away while you have it.
Since I tend to agree with that assessment, I couldn't recommend doubling down on building apps.
There may be other good reasons to consider that, such as moving in another direction (consultancy, which raises the interesting question: is there a such thing as iPhone app consultancy?), but not for that reason alone.
Edit: Google says that there is such a thing. It strikes me as likely that would be more stable long term, and, potentially, even more lucrative.
However, there is still a metric shit-ton of money to be made on the app store. I don't see people leaving it in droves immediately. He knows how to make money in this environment right now, so in my opinion he should spend at least some of the money he wants to invest on something he already knows how to do well.
I just don't see the wisdom in avoiding a marketplace you already know how to make money on; even if it has a chance of going away. Max has already proven that he is able to identify a market and take advantage of it once, who is to say he couldn't take advantage of the "next big thing"?
Then with the last %25, use that to invest in more appstore / development projects.
Why not do more of it? Scale up?
But at an angel level he probably only has enough to invest in 1-3, even fairly small rounds. So it's not too unlikely that all 3 of those companies fail and he loses it all.
High-risk bets, even those with high expected values, are bad if you can't afford to make the same bet enough times.
If you have not bought a house yet then I would look into doing that and taking advantage of the 8k tax break for first time home buyers. Sounds like you have enough down payment to cover 20% and get out of the PMI insurance.
You might use that money to hire another developer you can train and crank out more apps, and hit the android market as well.
Once it expires there should be a large influx of new homes for sale which will drive prices down. It's a game of buying now for the tax credit and 'saving' $8,000 or waiting a few months and possibly saving $20,000 because home prices have dropped.
As life continues, you'll find yourself with increasingly more disposable money (hopefully), and directly investing in yourself doesn't scale (either it's too risky or you can't use it to make yourself more productive).
Sadly, eventually you have to invest in other countries, companies, assets, or people; in short, invest in something you wish you could control more.
It's a good yet stressful problem to have, but maybe the most comforting tidbit in your case is I doubt the windfall you earned is a one-time thing. The lottery winner or not-so-bright heir to a sizable inheritance is in worse shape.
Invest the money in yourself. Bank it and use it so that you can ensure that you aren't going to need to spend your time making somebody else money in the future.
Some people have said to invest it in companies...the thing is that you are a company and it sounds like you're a pretty profitable one.
What do I do with the money? How do I invest it in making more money quickly?
Little effort, fast return? Then you need to take high risks. Is that really what you want? Maybe you'd be better off trying to scale your skills (which have gotten you this far) by expanding into other platforms/niches? Contracting out some of the work could help.
>I want other type of things that do not require much time investment, but give as good returns as that.
Why do you not have time? I presume you are referring to the time required to, say, manage rental properties? You've already proven that you're very good at creating software users want to BUY(!), so why not take some of the time that this money affords you (pay a maid, etc.) and figure out something more substantial to build while you're still able to milk the app store cow every morning?
Invest in startups - You might see amazing returns in ~2-5 years, but the risk is very high.
High risk hedgefunds - All equity/bond/commodity investment doesn't have to be slow. It can be risky and full of high returns/loses.
My favorite idea... Expand what you're doing: Use your proven track record and revenues to bank roll your own app store based startup/shop. Hire some people, branch out a bit and look into the android platform. You can avoid the need to take money from outside investors, and multiply your money that way.
You really don't need a lot of money to invest. Just look at the HN model. As an angel all you need is 25K to get into most early rounds.
tl;dr - If anyone knew of a way to turn 24k into millions, why would they say how to do it for free?
Because people are social creatures and often take great pleasure in talking about something they know a lot about and may have difficulty finding many people that really want to listen/discuss it. Besides, as gets stated here often, a great idea isn't worth much. You still have to put in the time and effort to get any payoff. So it's not much of a threat, really.
He's asking, in essence, how to get rich quick. If i have a grq idea, i'm either already doing it and getting rich, or planning on doing it (raising capital, finding co-founders, et al).
That still won't prevent some folks from wanting to discuss it just because that's the kind of thing that floats their boat. Maybe you aren't that type. Some people aren't. But some people just like talking about stuff. <shrug>
Build a site where the only goal is to serve ads and get visitors. Give away N of your ad revenue to a random visitor. Write viral hooks into it to propagate it faster. Of course it won't work for long - someone will eventually try to increase their chances by registering thousands of accounts - but while it works you could probably make a ton of cash.
Edit: perhaps with his appstore experience he could do this on the iphone - figure out a way to make it cost prohibitive to register thousands of accounts by tying accounts to a phone number?
In addition to your concerns, I will add that people seem to typically get rich pursuing a niche market which is a good fit for them as an individual. Which means a potential billion dollar idea is only a billion dollar idea for some people and not just anyone....um, which comes back to "execution", I think. :)
Nice chatting with you. I should probably shut up now and let people carry on with discussing what this individual might want to do with their money.
With the kind of money he has: Costa Rica, South of France, Tahiti, [insert sunny place]. Mojito Island
1. Look for a niche that hang around online, but don't know much about web stuff. Mumsy things, crafts... anything that's a tightly knit niche
2. Find their forums/blogs etc, and ask them what would make their lives easier? What would be the one thing that would be awesome that they want.
3. Build it. Possibly hire people to help you
4. Have a free, lightly crippled version (so it's still highly useful and awesome, but clear there's more awesome where that came from if they cough up)
5. Hire (hint hint) an awesome marketer and copywriter to design, write and perform ongoing analysis and optimisation of the sales funnel, traffic generation and site navigation
6. Reinvest the money in entering more niches, and refining the process
You should be able to launch a site a month, with an average sales volume of 7-15k from each site after 6 months or so. 12 months down the line, that should be earning you upwards of 100k p/m sustainably, with a max of 4 employees. I'm fairly sure you can live off that.
Here's something I just tried to see if it might help someone looking for a niche (since almost all are massively saturated, at least at first glance):
Hit Dmoz, control-click five sections on the front page. For each tab that's opened, choose a sub-sub-cat pretty quickly (maybe don't overthink your choices, but don't necessarily go for the largest option). If necessary, choose again on the next level. That should give you five things to look into further. I ended up with:
Never know what any of these might turn up. Lack of decent, dedicated blogs, need for small widgets, simple calculators/tools, etc. With anything though, unless you have confidence in your content or idea, I would keep it quick and simple and not invest too heavily.http://seoblackhat.com/2007/02/21/online-business-niches/
However, they're hardly niches and would be thoroughly dominated by MFA stuff already with little room to drive in a wedge. You could however pick a few of those, do keyword research on each and then pick a three-word keyphrase from that wider list to think about and focus on? I wouldn't bother going after a single keyword or even two-word phrase as the competition will be too fierce.
Happy to trade emails if you want to bounce any ideas off me. Can't promise anything useful or insightful, but hey, it's free to try! My background is 12+ years web development (backend and frontend) with side projects in forum/community, some passive content sites geared around AdSense plus bigger ideas that I struggle to find time to work on.
And I'd SERIOUSLY consider at the very least a) setting yourself up a SEP-IRA and b) socking away the maximum in an index fund. It is essentially monopoly money to you anyhow at the moment, right? Trust me, you won't regret having 30 years of appreciation on your monopoly money when you retire. (This will also simplify your tax planning for this year.) Index funds are a no maintenance investment -- as long as you can pretend that the money doesn't exist, you can get by with checking them once a year (or less!)
I do NOT want to invest in the stock market, or invest in anything long term like bonds or property. I want to somehow use the money to make more money quickly (within a 2 year time span).
Excuse me if I'm too harsh, but you should spend some of the money on a membership in Gamblers' Anonymous. Because you talk like a bad gambler. The hallmark of bad gamblers is that, if ever they get ahead, they look desperately around for a way to lose so they can get back to their comfortable status quo: Grifting, in poverty.
If you have money that you don't know what to do with, put it in some diversified investments that will make money over 30 years -- not two -- and forget about it.
The exception I'd make is the one patio11 cites: If investing a portion of your current profits in your current business will pay off, do some of that. But don't invest all your profits in this one basket: One of the most important forms of diversification is to invest in things other than your current project. You don't need another get-rich-quick scheme: You have that, and it even seems to be working. Good for you. Now hedge your bets with a get-rich-slowly-but-safely scheme.
You wouldn't tell this guy to learn to day trade or go into real estate. He's not going to buy savings bonds or open a money market account. He's not going to put it all down on gold.
So what is he going to do with his money?
Seems to me for any kind of investment, there are risks that could destroy it - houses can burn, companies go broke, money can be devalued, and so on. So some diversification is essential.
Time to plug Bernstein again:
http://www.amazon.com/Four-Pillars-Investing-Building-Portfo...
What you don't want to do is spend all your time reading hysterical ravings on the Internet and then somehow conclude that it is actually safer to blow all your money at the track, or on some crazy scheme to "double your money in two years". I don't care how scary the stock market is: It is less scary than whatever you plan to do to double your money in two years.
When the majority of people conclude that the "stock market is too risky", they usually look at the single problem of their investments tanking without looking at the bigger picture... which is:
First, if you invest money without setting a stop limit (rule #1 of investing) then you shouldn't be investing.
Second, if you invest in a quality index fund and you somehow do lose a majority of your investment (>50%), there are much larger problems at hand than just the loss of money. We're talking major economic / political / global unrest.
After witnessing the Sept 11th downfall and the October 2008 crash, I've come to the conclusion that there needs to be some damn serious issues to cause a significant loss in investments... Again, all of which could be avoided through proper diversification and setting financial loss limits.
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As a side note, I do think many people got lucky taking the "too big to fail" approach with many banks that ultimately received government guarantees. I do believe, however, that the snap-back we experienced in 2009 is NOT going to be the same in 2010. Obama has spent insane levels of money to prop up the economy and this sort of stomach-churning level of gov. spending simply cannot continue. 2010 will be the year for finding individual companies that have survived the recession trimming, but I honestly can't see the DOW/S&P indices going much higher.
Index funds are typically managed (for a very low fee) in such a way that they track the market. That means that to lose all your money the entire market has to completely collapse to $0, which hasn't yet happened and probably won't.
This is different from investing in a single company (or indeed in a house) - single company stocks have frequently reached $0, and houses can get caught up in natural disasters. Gold melts, paper money burns, people die, startups fail... but the weighted average of the market only suffers from a little bit of irrationality every now and again.
EDIT: It's also possible that the company managing the tracker could go bust and/or make a huge mistake. That did happened to one UK index fund and cost the participants about 10% of their accumulated capital. Spreading money around is the only way to limit your losses when the universe decides to hand you a truck full of bad luck.
You appear to be using a very roundabout way to say that there is no reasonably safe way to turn tens of thousands of dollars into hundreds of thousands in 2-3 years. If that's what you mean, just say so. Implying that everyone already knows this by insulting the OP doesn't really have the same effect.
Was that tepid enough or should I also insert a series of sleep-inducing legal disclaimers? ;)
The above advice is utterly conventional. Every reputable book on investing says it. Indeed, most books and pamphlets on how to get rich quick say it as well, in the footnotes that nobody reads. The brain slides off such disclaimers like water off a duck.
So one tries to find a more dramatic way to say the same thing.
And while I'm explaining things I thought were obvious: The OP is not a gambler -- or, rather, he has placed an intelligent bet and won: He is now making money hand over fist by building products that sell. Nothing wrong with that. Except that now the OP seems to be having that unnerving feeling -- which everyone gets at least once in their lives -- that he's missing out on something big, some kind of big secret to moneymaking that the cognoscenti know. And, indeed, there are people who make amazing amounts of money in 2-3 years. They do it by gambling -- and when gambling works, it works. It just doesn't work very often, and you rarely hear from the people who place risky bets and fail. One's mind often fails to register those people. Sometimes you have to take deliberate, dramatic steps to make yourself see them.
It's not a '2 year high return' but like some of the other commenters have said, you're not going to find that.
Congrats on the app store success, I'd love to pick your brain. I'm currently working on some games for the app store , what type of apps have your written?
You invest your current 24,000 and each month you add 20,000 to your investment. Let's further assume that you can achieve an annual return of 3.5% and that return is evenly distributed over the year. In this scenario you'd end up with $520k after two years. You're half way to being a millionaire.
If you instead contributed $25k each month you'd end up with nearly $650k after two years. That's 50k above your contributed principal or an 8.3% return over two years. Further, your risk is significantly reduced over any other get rich quick scheme and this allows you to continue to focus on what you're doing.
As for your problem, do what most people say here: invest in the best asset you know: your business model. If you are very lazy, then just simply figure out how to let someone else do the work.
And I wonder if you meant that question seriously? The wording sounds awfully naive.
What would you do if you had already made yourself rich? What would you spend your time on?
Why not start doing that right now? Why do you need to "make yourself rich" before you can do it?
But as long as you're having fun finding ways to make more money, there's really not that much wrong with playing the money game. Just don't care too much about money :).