Math matters. Have You ever heared stories about a fantastic business from someone around you? Or maybe someone offers some brilliant way to earn money? You see an ad for some brilliant financial product, or maybe someone is trying to sell you that “brilliant” financial product. What connects them. Just, that math is ruthless. Sounds a bit mysterious? Ok to the point. All the things described above are, or rather should be, based on mathematics (but what is he writing about?). So let’s summarize.
Fantastic business – so much ad says, but pay attention, you don’t know the numbers, so you can only listen to the “marketing” story unexpirenced. You are unable to judge it. From some colleagues you will probably learn how they started, how they came up with the business idea, who gave him a hint, idea etc. You will probably hear how stable and future-proof this business is. I know, that such stories are fantastic to listen to. These are actually motivational stories. You feel, that you can do the same. But actually … you still don’t know the numbers, the profits, you don’t have information about the loans taken by those persons. Maybe thhose persons eat the owned or borrowed property, giving the appearance of success. You still don’t know the numbers. In fact, maybe a bank deposit gives you a better profit, than this brilliant business.
Someone proposing to buy a brilliant business, like one above, may be aiming to show you only this picture. You are to see non-mathematical side of this business. But maybe it is not proper to talk about money. It could be manipulation. Personally, I would never want to get rid of a business, that is so brilliant and brings me high returns, is future-proof, etc.
Incalculable business image
Note, that people often use uncountable categories in various contexts, talking about busines:
– worth buying
But what does it mean? You never really know. Again, I’ll say it: math matters. The above responses should be in the following form:
1. 10% per annum without risk.
2. 3% per year with medium risk.
3. Company recorded loss on level -15% per year.
Come back to similar uncountable advertisements mentioned earlier. Someone wants to sell you a brilliant financial product. This is a good example because this is a personal finance blog. So what do you hear about such advertising of a financial product:
– brilliant manager responsible for this financial instrument,
– a product created especially for you (really?),
– if you buy now, you can buy with a 10% discount,
– and finally the last information, those who bought last year have already earned 20% (can anyone prove it).
Unfortunately, this is only marketing. So again, often pieces of information show, what the customer should see, not numbers, anyway. In this case, math should be used again. It should show, how much you can earn, with what risk, how much does this instrument cost – all expressed in numbers. Of course, you need to know how risk is expressed mathematically, there will be an article about it soon.
Math wherever you can
Math metters. Everyone dealing with personal finances, finances and all above, business should know and support it, but… they often don’t. Everything, that is related to money and more must be viewed through the prism of mathematics.
Et the end still math
Only math matters, everyone must be aware of this. Conclusions from this article? Calculate, calculate and calculate again. It does not matter whether it is about – shopping, earnings, sales, running a business, relations with a bank or your vacation. In the vast majority of reports and conversations there are words and there is math in the background. If you do not pay attention to the math, you may end up losing money or other even more valuable things. Although someone will say that apart from mathematics there are also, for example, contracts – which will be discussed soon – mathematics is the most important at the end. So, calculate, calculate and calculate again, math is ruthless.
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