You Need More Bases: How to Level Up Your Income Like a Strategy Game

Dear Reader,

I want to start this off by saying I am no finance guru, I am not a finance professional.

I've picked up a few things a long the way and figured if I can help one person from this post then it is worth doing.

You ever play one of those Civilization games? or better yet Polytopia ?

It's a game where every turn you get a certain amount of money per base you have. The goal eventually conquering all and getting everyones bases.

Each base has its own level and you get increased income on how high it is. As you level up it gets harder and harder to level up the bases. This is also because the amount of resources beside the base reduces as you level.

So one would think that you level up one base as you can, then go to other bases, but of course it depends because you have to deal with attackers.

Now you might be asking why I am rambling on about some game. Well it's because it connects to finances. Specifically to you.

When you start the game you have one base. That is you.

You can grow that base to a high level. But as it goes, it requires more and more effort to upskill yourself.

Think about it this way, the typical school track is like so:

Middle School -> High School -> Bachelors -> Masters -> PHD

Each upskill takes years and resources to get it. The final PHD taking 5+ years.

Meanwhile you aren't making an income, and accumulate more debt, but again it could pay off.

Similar to Polytopia. You start with one base, and you fairly quickly expand to multiple bases.

Now what does it mean to expand to other bases?

The equivalent would be to get other income sources in our world.

If one of your bases in Polytopia falls, its not the end of the world, you can conqeur it back, or get other bases.

Similar in real life. The more bases and income streams you have the more resilient you become to external forces.

That is why its important to maximize your income, to save it, because eventually it will help you expand to further income streams.

Every dollar you have is like a little dude that can go to work for you, while you sleep.

Now what are practical and proven ways that I have increased my income streams?

Investing in Vanguard ETFs (Exchange Traded Funds)

The stock market used to allow people to pool their funds to pay for ships to voyage overseas and get resources from foreign lands. Now it's much more convenient and less risky.

ETFs are a collection of shares of many companies, the companies selected are from indexes. Indexes are fixed rules that either add or remove companies over time. For example the S&P 500 index tracks the 500 leading companies on the stock exchanges in the US.

So an ETF doesn't have a human selecting the stocks to add or remove like mutual funds.

This allows for a lower MER (Management Expense Ratio), which is the cost you pay for getting someone to select stocks for you. That's why I recommended Vanguard ETF's because they typically have very low MER.

It's important to have a low MER because it directly affects how much you make over compound interest.

Compound interest is the money you earn re-invested and earning more money. It's exponential growth and the reason for majority of gains in the stock market.

For example investing $1000 for 5 years, with 10% earnings is below: Simple interest: $1,500, Compound interest: $1,610.51

If you've saved $100,000 and have that much invested let's look at the same calculation: Simple interest: $150,000, Compound interest: $161,051

As you can tell the preference for a lower MER directly translates to making less money from the above difference because you are making less money to re-invest.

There is a lot more to go over in investing in stocks which I will cover in further posts. But for now let's go over a different potential income stream.

Side Venture

Investing your time into growing a business on the side of your job can be another great option for you to build a base on. You can also purchase an existing one, and use Seller Financing depending on the opportunity.

Outro

Really the point here is, when you have a job you are selling your time for money. It will only scale so much. You need more bases. You need to expand. You need to give more value to the world.

I mean that is if you want to. A paycheque is enough to get by, and money isn't everything.

But you can never go wrong focusing on self-actualizing.

That is where you should focus your efforts on where to expand your bases. What are you uniquely good at?

That's all for today, I hope I've given you a little more perspective, and given you some excitement in your potential future.

This has been a letter from a coder.

Best Regards, Tyler Farkas