On Why Money Management Is a Great Business


Using the checklist found here at https://wealthymatters.com/2011/03/01/the-perfect-business/ it’s easy to see why money management is a great business to be in:

1.High profitability. Costs are low .It is possible to operate a money management business out of your home and it’s possible to manage with very few employees.Plus the fees are guranteed and high.

  1. 2.High returns on capital. It costs almost nothing to get into the money management business, growth requires little capital, and there’s virtually no cap ex.

 3.An enormous moat. In this area, money management businesses don’t look so attractive, as there are almost no barriers to entry. On the other hand, a talented money manager is very rare and having one onboard vastly improves the competitive position of any money management business.

4.Profitable reinvestment opportunities. While money management businesses don’t require much capital to grow, the lack of reinvestment opportunities is hardly a disadvantage. The owners can simply take their profits and reinvest them in other attractive opportunities — that’s their business after all.

5.Future growth. The money management business is almost infinitely large worldwide and is growing at a healthy rate, so the sky’s the limit for a successful firm. In fact, the most successful ones tend to stop growing not because of lack of opportunities but because they choose to stop taking in new money.

6.Good cash flow dynamics. Investment firms have no inventories, and management fees are generally paid in cash, in advance.

Now do you think you would like to go into the money management business?If so do you have it in you to be a good money manager? Check this out here:https://wealthymatters.com/2011/02/23/have-you-got-it-in-you-to-be-a-good-stock-market-investor/ and take the quizzes here:https://wealthymatters.com/2011/02/24/psychology-of- wealth/ .Even if you can’t be a good investor yourself why not hire someone good to run your money management business?

About Keerthika Singaravel

One Response to On Why Money Management Is a Great Business

  1. Pingback: Mohnish Pabrai « Wealthymatters

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