Insight on Debt and Investment

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Yesterday, my friend invited me to have lunch. He gave me insights on how to invest, based on his experience. There two points about how choosing the decision on financing the project.

Only take a debt on a finite game project. A finite game means where the success or failure factors easy to predict or control. For instance, you won an auction for website procurement. The value is $10000. But, you need $5000 for working capital. Get the $5000 from debt.

Conversely, avoid debt for infinite games. A game where everything out of your control. The success and failure factor hard to predict. The basic reason avoids the debt on the infinite game is, it will trap you. Because the cost of solving debt, usually, is bigger than raising revenue.

Therefore, if you have a project in infinite games use the investment instead. You will share the risk to your partners if something wrong happens. However, investment requires a scalable and long-term project.

The small project is not worth to do for a long time. There are two reasons. First, because it will trap you doing unworthy. Second, the incentives must be divided. Since the project small, your portion may be small too. Small incentives decrease your motivation and prosperity.

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Internet Marketer

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Aef Setiawan

Aef Setiawan

Internet Marketer

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