The world is changing quite significantly, particularly the way we learn things nowadays and the way we make money. It’s a revolution from Industrial Age to Information Age. No need to go to the libraries anymore, just Google and you will get the answer. It’s much faster, will save time and hassle; don’t have to search 100’s of materials to find the answer you are looking for. Someone already did that research and published its finding in the internet. And that brings to fantastic opportunity to learn and grow faster, easier and with your convenience. The knowledge is basically in your pocket and available most of time (through mobile).
Same thing with making money, there are so many different options nowadays. No need to stick to the same old boring jobs, or the same old brick-and-mortar traditional type businesses. But more importantly I guess we have to change the way we do things, particularly the way we make money. Otherwise our survival will be in question. Job security is no longer exist, it’s a fairy tale now. The baby boom generation had only one job in their entire life, but look at now, before anyone even reach 30 they probably would have had changed at least 3 to 4 jobs if not more. It’s either because they don’t like the job anymore, or the company doesn’t like them anymore, or simply they made redundant because the employer don’t need them anymore. Their skills have been replaced by technology or robots. Here is a fantastic blog post by Wolf Richter, discussing robots eliminating jobs:
“How many jobs do robots – whether mechanical robots or software – destroy? Do these destroyed jobs get replaced by the Great American Economy with better jobs? That’s the big discussion these days.
The answers have been soothing. Economists cite the Industrial Revolution. At the time, most humans replaced by machines found better paid, more productive, less back-breaking jobs. Productivity soared, and society overall, after some big dislocations, came out ahead. The same principle applies today, the soothsayers coo.
But this isn’t the Industrial Revolution. These days, robots and algorithms are everywhere, replacing not just manufacturing jobs but all kinds jobs in air-conditioned offices that paid big salaries and fat bonuses.
Just today, BlackRock announced a plan to consolidate $30 billion of their actively managed mutual fund activities with funds that are managed by algorithms and quantitative models. As these software robots take over, “53 stock pickers are expected to step down from their funds. Dozens more are expected to leave the firm,” as the New York Times put it.
“We have to change the ecosystem – that means relying more on big data, artificial intelligence, factors and models within quant and traditional investment strategies,” BlackRock CEO Laurence Fink told The Times. In a similar vein, “robo-advisors” are becoming a cheap and hot alternative for many customers at major brokerage houses, replacing human financial advisors. A lot of the grunt work that used to be done during all-nighters by highly paid law school grads in big law offices is now done by computers.
So job destruction due to automation is not a blue-collar thing anymore. It’s everywhere. But soothsayers have been steadfastly claiming that for each destroyed job, the Great American Economy will generate more and better jobs, because, well, that’s how it worked during, you guessed it, the Industrial Revolution.
But two economists have changed their mind (more on that in a moment) and published a gloomy working paper.
Daron Acemoglu and Pascual Restrepo studied how the increase of industrial robots between 1990 through 2007 has impacted US jobs and wages. They found “large and robust negative effects of robots on employment and wages across commuting zones.”
He carries on saying –
“Between 1990 and 2007, industrial robots have eliminated a net of 670,000 jobs, according to the study. For perspective, this chart shows the total number of employees in manufacturing, which dropped by 36% from the peak of 19.5 million in 1979 to 12.4 million in February:
However, manufacturing output, adjusted for inflation, soared due to automation until 2007. During the Great Recession, output crashed. Now it has finally edged past its prior peak:
The number of industrial robots in the US is expected to quadruple. So job losses in manufacturing will continue, even if output rises.”
Read the full blog post here: http://wolfstreet.com/2017/03/29/how-many-jobs-do-robots-destroy-answers-emerge/
Here is another article published in NZ Herald on Mar 23, 2016, (I have a special interest in the article as I live in New Zealand):
“Almost half the jobs in New Zealand may be done by computers and robots in the future, researchers say.
A study by the NZ Institute of Economic Research (NZIER) has found that 46 per cent of current jobs are at “high risk” of disappearing in the next decade or two.
Most that go will be relatively low-skilled and low-wage jobs. The study found that 78 per cent of labourers and 74 per cent of machine operators, drivers and clerical workers are at high risk.
But some highly skilled jobs are also at risk, including 63 per cent of technicians and trades workers, 24 per cent of managers and 16 per cent of professionals such as accountants.”
Read the full article here: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11610112
On top of all these, the amount of money average households making nowadays are not really cutting it. Day by day it is getting tougher. We already got our partner to work (in industrial age, husbands used make the money and the wife makes the home), very soon I guess we have to let our dogs, cats to work as well.
Point I am trying to make is that it is time now that we look at other options to better prepare ourselves. Better dig the well before we need the water. It is time now that we look at options to create extra incomes or incomes to replace your job income, and be independent, self sufficient. No more “yes sir, no sir, can I go to toilet sir?”
So, what are the options we can look at to generate extra income or replace our income? We can look at getting a second job. What about a brick-and-mortar type traditional businesses? Why not look at a part time home based type businesses which involves selling, may be network marketing?
Second job – with the second job, most likely you have to commit to another fixed amount of hours (I would imagine minimum 4 hours) before, after or on weekends. Think of time, we already have so less, especially if you work in corporate world, there is not much time left to do anything else. Forget the work-life balance.
Brick-and-mortar business – recent statistics say that more than 80% of those businesses fail within 5 years due to lack of expertise and or cash flow. On top of that you would need a huge investment to start with; I would imagine at least couple of hundreds of thousands to start a small business. If you wanted to get into a proven business model like McDonalds, think of at least a million plus.
Home based selling/network marketing – this could be a great option even though chances of success is very less. Initial investment is very low, that’s why to most it becomes a very promising proposal. However selling is not a easy thing and it doesn’t come naturally to most of us. That’s why you hear the saying, “I hate selling” all the time.
Real Estate – real estate could be a fantastic vehicle to create wealth and keep the wealth. Certainly if invested properly, can create a huge cash flow and become financially independent. But the major problem with the real estate investing is that you would require quite a bit of capital to invest in and liquidity is a concern. Means, if you make a mistake and want to get out of the deal, it would be very difficult to do so and as such the risk can be very high. And as such you have to be very smart to invest in real estate. Other concern is that majority invest in real estate for capital gain, so in near term this doesn’t create a cash flow. Only the smart and acute investors invest in real estate with the view of creating a cash flow. To majority, creating a cash flow from a real estate investment is like a fairy tale, mainly due to lack of knowledge and financial education.
That got us to look at the other option, paper asset – stocks and bonds. Here is Robert Kiyosaki’s (Best selling author, investor, and educator) view on real estate, business and paper asset. He writes in his short eBook “Inside My Mind & Predictions for 2017” – “The trouble with business and real estate is that they’re illiquid. When investments are illiquid, you’ve got to be 1,000 times smarter. With stocks and bonds – paper assets – they’re liquid, so if you make a mistake you can exit very quickly.”
I guess, the reason most of us never look at ‘paper asset’ popularly known as ‘stock market’ is the scarcity that has been created by the media and the populous. You will hear people say, “You will loose all your money”, “its gamble” etc. Of course it is if you don’t know what you are doing. But that’s true for everything, be it trade in stock market or build a business or invest in real estate. Even a job nowadays if you solely depend upon that and believe your employer will look after you.
Sometimes I feel that all these rumours are created by so called ‘experts’ so that we handover our money to them to manage and grow our fund (or loose it all), and they make their living on earned commission. After all they are the experts in the field and they know everything. They use all technical jargon intentionally and make it sound like the subject is so completed that it’s not everyone’s cup of tea.
Trust me it’s not that difficult and it can be learnt. It’s a skill and it can be developed. You will fail and probably fail again and eventually will learn how to paddle and balance and before you know it, you will zoom out with your bi-cycle and leave the majority behind.
In today’s world, having only one income source is dangerous. You got to diversify and have multiple sources or at least have one alternative source to generate income from. The good news is that it’s never been easier than what it is now, at least with paper asset. Learn and practice on your own pace and when ready, just jump in.