Tiered Money
Low-Hanging Fruit - A low-hanging fruit is a commonly used metaphor for doing the simplest or easiest work first or for a quick fix that produces ripe, delectable results. In sales, it means a target that is easy to achieve, a product or service that is easy to sell, or a prospective client who seems very likely to buy the product, especially compared to other, more reluctant prospects. The phrase also refers to a problem that is easy to solve. – That’s the Investopedia definition, to Eddiephrase - an opportunity that is within reach for you.
I use this idea as a principle. I’ve applied it to Tiered Investing. Not sure if that’s been trademarked / used yet and if it hasn’t then dibs. Tiered Investing is the less sexy sounding name of Tiered Money which is what I’ll be calling it henceforth in the writing.
“Hey Eddie, what’s Tiered Money?”
Glad you asked friend =)
Tiered Money is investing with the low-hanging fruit available to you and thinking less to none about that which is not.
For example, if you had $5,000 that you could invest and invested $1,400 into a stock and are excited about a 70% return over one year, great! It’s a passive investment and that’s a great return percentage - supposedly. I’d bet two Pepsi cans that you probably spent every M-F looking at it and even more so thinking about it, which doesn’t sound very passive does it? Now if you can not look at the investment for weeks at a time, you are a superior being and all praise be unto you.
“But Eddie that’s a great return, the S&P had like a 20% gain and that was better than most mutual and hedge funds.”
Correcto. But that won’t make much of a dent in your savings. Better yet would be to take that focus into something that you can actively grow. Let’s say either a part time hobby that you can monetize, which is great because assuming it’s different from your day job or current business, it might be more interesting than to double down on your work ethic or put more hours in at your current main money machine.
Moving down in my collection of words,
Here we continue on with a definition ( quite fancy aye? )
Investing - Giving up purchasing power now with the expectation of receiving more purchasing power in the future. That’s my favorite definition of that word, but here it will simply mean excess money that you can invest i.e. excess business income, saved up money, gift money, etc.
Now, a roman numerated tier table!
Tier I
Dependent on someone else to take care of you. You don’t have a job or are too young or various other reasons.
Tier II
You produce income but do not have enough to invest. Your expenses outweigh your income.
Tier III
You have excess income. Saving has begun.
Tier IIII
Savings are ample enough and there’s money enough to invest.
Tier V
You still must work to produce income, but investing has taken off. Investing produces 10-30% of your annual income.
Tier VI
Investing has matched annual income produced. You can live off your investments but not with a peace of mind.
Tier VII
HNWI or even a UHNWI individual. Can comfortably live off investments.
Tier VIII
Hmm what kind of yacht should I buy? Would a 400 ft yacht come off too posh?
No of course not and if you’re in this tier and reading this, don’t be shy - I would happily accept your invitation to your yacht christening.
TL;DR – Focus on investing in where you will have the greatest influence on your income. Defocus on everything else.