Minimise risk by innovation

When I was in Class 9, around thirteen or fourteen, I decided to take on a job. I was not selective. What could a scrawny fourteen-year-old do? So I joined a bank as an office boy.

The work was cut out for me. Coffee and tea for the employees, stationery, empty the dustbins, keep the floor clean, keep the paper tray full, and guide people to the right counter when they asked.

By working a few months I saved around three thousand rupees, which was an enviable sum in those days. I wanted to see it grow. Stocks and bonds did not feel safe to me. I could have loaned the whole amount to one person for interest, but then there was the risk of a defaulter taking all of it with him.

Then a brainwave hit me.

Innovation is necessary to cut down risk. Conventional methods might not always work, and you might lose more than you gain.

I could lend the money out in small amounts, say five hundred rupees, and take the interest at the outset. So if someone wanted five hundred, I gave them four hundred and fifty, and they paid five hundred back over a hundred days. One percent a day.

This worked well. Within a few days I had enough back from repayments to lend to someone else. So I would lend, get a part repaid, and lend the repaid amount out again. The risk was spread thin and the returns stayed high.