Library of ideas
Library of Ideas

crucible of experience
Crucible of Experience

stairway to a fortune
Stairway to a Fortune

Treasury of Tales
Treasury of Tales

Vault of Old Videos
Vault of Old Videos

Portfolio of Motivation
Portfolio of Motivation

Table of Negotiation
Table of Negotiation


Additional articles:

Get Rich After Retirement

Never Break the Copper Rule!

Barter Page

Step Twenty Eight to a Fortune:

image of an open caliphone record player

 

Experiment Title

Big Profits in Record Players

Vision

I discovered a market for old record players.

I was looking to see if there was a market for old phonograph records.  There was.  I had a lot of old records, but I had no way of knowing the condition any of them were in.  As I looked into the possibility of buying a record player, I discovered a market for phonographs I did not know about.

About this time I stumbled upon a local school auction for 15 record players.  I bid $45 and won.  It turns out there were only 13 record players.

Objective

Step 28 schedules an investment of up to $10.90 looking for a $11.90 or more.  According to the overview of steps, It was suggested I reduce old junk for this step.  I have 13 record players in a closet. That is not old junk, but I need to get rid of them.  They take up far too much space.

From $204.93 in reserves , I was supposed to invest up to $10.90 in hope of expanding that to $11.90 or more.  I won an auction for $45 and got 15 potential inventory items for that money as well as making it possible to check out my old record collection for possibility of sale.

This works out to $3.50 for each phonograph.  I could not have done this large of a deal had I not had a nice reserve.  Sometimes this will happen.

As in the previous step, I put two transactions together as one to get it to an appropriate size, here I make one large buy and break it down into many deals as I sell them.  There are no fast rules to this process; we do what works.

Step 28

Starting capital                                    $204.93

Planned investment     risk                      $10.90

receipt goal                                           $11.90

 

Hypothesis

If I find a great opportunity larger than I am conditioned to handle, I can break it into smaller deals to match my current experience level.

 

Procedure

 

I bid $45 for these "record players." 

I won the auction but one of the items turned out to be an old projector.  Unable to find a market for it, I discarded it.  Another was a tape player that did not work well.  I discarded that.  Now I had 13 record players in various states of repair. 

So each of these items cost me $3.50.

The first unit sold for $79.12 including postage

 

Results

$79.12 - $3.50 cost = $75.62. There was additional expense of $25.98.  I had postage, ebay final value fees, insertion fees, and pay pal fees, which leaves $49.64 gross net before deductions for tax and contributions.

Note:  When a capitalist steps outside his experience level, expenses can happen that he is unprepared for.  A large reserve capital fund provides easy funding for surprise expenses that might drive a less prepared capitalist to failure.

                                 gross net profit before deductions was $49.64

Ending gross capital  (before deductions)            $254.57

 

Questions

What did I learn from this step? I learned that if I build a large surplus, I can take advantage of really good opportunities when they come up.  By keeping my investments at levels I can handle, I not only preservemy capital through money management, but provide a deep well to draw from when that special deal comes up. 

This is the difference between calculated risk and blind risk.

 

Conclusion or Final Result

 

I started with $204.93 in capital. I was looking to risk $10.90 in hopes of growing it to $11.90.  My total risk prorated over 15 future deals comes to $3.00 purchase plus additional expenses that came with a larger sale.  After the sale before tax and charitable deductions I had  $254.57

 

35% tax on $49.64 is 17.37  that renders $32.27

10% for contribution from $32.27 reduces that by $3.20. Now we have

$29.07 increase to make  $234.00 for investment and surplus to cover bad deals.

Next Step 29