Minimise risk by innovation

As I have mentioned in my earlier blog posts, I have not had a privileged upbringing. I had to work for the things I wanted and have taken care of myself from a very young age.

When I was in Class 9 (I was around 13 – 14 years old), I decided to take on a job. I was not selective – after all, what could a scrawny 14 – year – old do? So, I joined a bank as an office boy. My work was pretty much cut out. I had to get coffee or tea for the employees, look after stationery, ensure the dustbins are empty and the floor clean, see to it that the paper tray is always full, and guide people to the right section if they asked.

By working for a few months, I managed to save around Rs. 3,000 (an enviable sum in those days). I wanted to see my money grow, and I did not think of stocks and bonds as a safe option. I could have loaned the money to someone for an interest, but there was the risk of defaulters.

Then, a brainwave hit me! I could loan the money out in small amounts (say, Rs. 500) to people who need it, and deduct an interest of 10% at the outset. So, if someone wanted Rs. 500, I would give them Rs.450, and they would have to pay Rs. 500 back in a span of 100 days. They could pay me 1% every day.

This worked pretty well because in a few days, I has enough money from repayments to loan it out to someone else. So, I would lend, get a part repaid, and loan the repaid amount again!

This way, the risk was minimised, but the returns were maximised.

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

Image courtesy: https://pixabay.com/en/business-innovation-money-icon-561388/