Jason Fried what Jon Kinney asked and how is taking money out instead of reinvesting it reduces…
Alex Bush
121

Gotchya.

It’s like if you’re in Vegas and you’re up, doing well. You brought $500 and now you’re up $2500. You can keep rolling with that $2500 to try to turn it into $5000 or $7500 or whatever… But you’re also piling on the risk every time you press your luck. It’s really easy to lose it all quickly and never have benefitted from any of that profit along the way. You had it, but now it’s gone.

In our case, we’d take that $2500, put the $2000 in our pocket, and then go back to work with that original $500 again. Maybe we can turn that into $1500… And we can take that $1000, put it our pockets, and go back to working with the $500 again. This way we are reducing our overall risk because we’re taking money off the table as we go, vs. piling it into bigger and bigger bets with uncertain outcomes.

Make sense?

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