Each month, I give a friend of mine a percentage of my blog earnings. 10% actually. He does no work, provides me no value, and doesn’t help promote my blog. He doesn’t even read it.
He does nothing for me, and in return, I give him 10% of the money I make from my side job.
For those wondering, no, he has never saved my life.
It sounds crazy, but what it boils down to is an investment. I have an agreement with this friend that I will give him a portion of my side business if in the future, he gives me a portion of his. Basically, I’m banking on him making millions on a side project and that paying for my retirement.
It sounds dumb, but in reality, he has a much better chance than I do to make real money. He’s a programmer and he’s always thinking of innovative ideas. He has built iPhone apps and sold them and I’m pretty confident that he will make something worth a lot of money. And I’ll be there to reap the rewards.
If you told me 3 years ago that I would have made tens of thousands of dollars by blogging at age 24, I would have either said, “that’s sounds like a pretty good life, I’m glad I won’t need a full time job, too,” or, “yah right, never in a million years would I consider myself a writer.”
I think that I got pretty lucky and kind of fell into blogging and making money by accident, this was never a plan, and boy have I been fortunate. I did not see it coming. This my friend, I see it coming, it’s just a matter of time. And I think my rather small investment in 2011 is well worth the possibly payout in 2012, 2013, or beyond.
What interests me about this type of agreement is the possibilities for other people. Would any of you invest $20,000 in my today for 1% of my future earnings? The break-even point would be $2 million, after which you’d start to make a dollar for every hundred I earned. To give you a sense of where I’m at now, I’ve taken home about $150,000 so far since graduating college. If I made that much on average, it would take about 26 years to break even, but there’s an assumption that I would increase my earnings over time.
Maybe I need to increase the buy-in? Or I can sell 100 shares of myself at $20,000 right now, pocket $2 million, and retire immediately. If I don’t make more money, I don’t have to pay you guys anything!
Readers, what do you think of my investment choice? Should I just have stuck the money in an index fund? Or is it a reasonable thing to do? What are your thoughts on investing in someone else’s earnings?