Day 3 – What's in it for me?
Today we are going to talk about a subject near and dear to my heart, and that is Return on Investment (ROI). Another way to think about ROI is to ask yourself what you will receive in return for the risks you take when investing your time, energy, or money? What's in it for you?
To simplify the discussion we will assume that everything can be calculated into inputs and outputs and summarize our arguments down to how much you put in vs how much you get back to help identify whether our ROI is positive or negative.
Let's start with an example of what I would consider a great ROI... When you plant an apple tree, it may take a few years to start producing but once it is producing it should continue to produce for decades to come. You have a one time upfront cost and you receive a dividend for as long as that tree is cared for. To help illustrate in dollars and cents, assume you spend $200 a year on apples at the store and the alternative is to spend $200 worth of time, money, and energy to plant your own apple tree. You will have returned your original investment once that tree has produced $200 worth of apples. If it takes 5 years before it starts producing the first yield of $200, you would have earned 20% ROI on your initial investment – averaged over the 5 year period. The real fun comes from the fact that on the 6th and subsequent years, you will be receiving 100% ROI from your original investment for every $200 worth of apples the tree produces.
Try getting that yield in a local bank account!.....Read More