Thursday, 19 December 2013

Bad ways to earn money

What do lost bank accounts, pyramid schemes, lotteries and YouTube have in common?  All them are bad or low probability ways to earn money.

When you talk about “Ways to earn money”, there are good or high probability ways (e.g. Employment, Investments, Government Transfer) and bad or low probability ways (e.g. Marry Money, Win the Lottery, Inheritance).  I thought it would be interesting to expand on the list of low probability ways. 

Lost Bank Accounts.  I wouldn’t consider this a bad way to earn money but the chances are slim of finding large amounts.  Here’s how this works.  If someone has a deposit or financial instrument at a bank or trust company and they haven’t touched it for 10 years and can’t be located, the balance is given to the Bank of Canada.  These balances are then held for between 30 and 100 years, depending on the amount, waiting for someone to claim them.  All you have to do is go to the Unclaimed Balances web page of the  Bank of Canada website to see if you or a relative has a dormant account waiting to be claimed.  Most likely you won’t get instantly wealthy from the accounts here.  Over 93% of the balances are under $1000.  So of course I was curious and did a search of everyone with my last name.  No accounts with my name or any relatives so I was out of luck.  To give you an idea of the amounts, I looked at the first 30 results with my last name and the amounts ranged from $2.27 to $8,456.75 or an average of $780.21.  Not a lot but I wouldn’t turn it down.  Take a look and good luck!

Pyramid Schemes.  When I was a few years out of university, I was approached about a “business opportunity”.  I was invited to a meeting with others given the similar pitch and was told about the opportunity to join the sales force of a mutual fund dealer.  We would start at the entry level, learn the business and while learning, most of the commissions would go to our managers.  To make more money, we could recruit others to join the company, help train them and most of their commissions would go to us and so on.  It was only a few minutes into the “pitch” the word “Pyramid Scheme” popped into my head.  I looked around the room and seemed to be the only person not super excited about this opportunity.  Since the person recruiting me also gave me a drive to the meeting, I did a painful amount of smiling and nodding until I could get out of there. While researching this posting, I learnt this could have been multi-level marketing which depending on how it is run could be legal whereas pyramid schemes where people pay money to join and get paid from the money paid by others joining afterward are not.  All I know is I’d make very little money starting out until I recruited others making very little money to pay me.  Not much difference that I could see. If it looks like a duck, sounds like a duck and walks like a duck, it is a duck.  Check out the links below if you want to know more about what to look out for. 

Lotteries.  There are lots of people that religiously buy lottery tickets with the hope of winning big.  If you take a look at the odds of winning, Lotto 649, one of Canada’s biggest lotteries, at the time of this posting, there is a 1 in 14.0 million chance of winning the largest prize.  It makes for a good way to have some fun dreaming of winning big but not a great way to count as a source of income.  Rob Carrick in his article “Six tips to help you to help you build wealth in 2014” talked about this very idea by telling us to “Forget about the lottery win”.

YouTube.  Many people have made a lot of income from “monetizing” or allowing advertisers to post adds on their YouTube videos. Top earners are making millions of dollars.  But for every millionaire, there are thousands of people making a lot less.  My son is a perfect example.  He started a gameplay channel called TheJimmyJ57.     Let’s look at his stats.  He monetized his channel in March 2013 and by June had made his first $50.  During that time, he posted 188 videos, had 46,000 views and spent on average 1.5 hours to make each video.  If you do the math, he made 18 cents/hour.  Definitely not a lot.  I can only imagine the amount of work and luck needed to get to the top income level.  So if you like Black Ops 2 or GTA, take a look.

Want to read more about the above?  Check out the following:

James Whelan, moneymatters4life.blogspot

View James Whelan's profile on LinkedIn