Recently, the reader of this outpouring may recall, I contributed to the Canadian innovation discussion, such as it is, with a lengthy letter to the Science, Technology and Innovation Council. That episode, which included some engagement on a LinkedIn forum as well, got me to thinking about how Canadian enterprises invest money that is provided via public largesse. It might be worth more consideration. If you feel like responding, feel free. Here’s the notion:
Let’s say that your have a small business and that your household is financially solvent and able to do what it needs to get by day-to-day and perhaps even make some modest gains in the standard of living and wealth of the family. That is, you’re not having a hardscrabble life of hand-to-mouth where every penny available is a sustaining penny. Now let’s assume that some benefactor provides to you $1000/year to invest as you wish with only one condition: whatever you invest in must be directed toward lifting your family toward a higher standard of living, nothing more.
Digression: because of the looseness of the definition, “lifting yourself to a higher standard of living” could mean making an investment that is expected to return some form of asset growth upon which you will eventually have considerably more income. It could also mean using the $1000 to increase your available cash flow by that amount–thereby increasing your standard of living. Only because it muddies the thought experiment, let’s say that everyone appreciates and pursues the first choice.
The question, then, is this: What do you do with the $1000 per year that is essentially found money? I’ve so far been able to identify four possible uses, although there may be more. Ignore tax implications.
1. You use it to pay down your debt, which will increase your bottom line because your monthly sustaining costs are being reduced.
2. You use it to buy guaranteed A or better debt, which will return a highly-certain but small ongoing addition to your annual income.
3. You use it to invest in stable, “blue chip” equities that are likely to go up within some reasonable range that is higher than the debt instruments but likely to average out not terribly higher on the whole.
4. You put $250 each quarter on a (potentially different every quarter) high-risk venture, all generally consistent with your business expertise and activity. To be clear, these are investments into relatively early innovations that seem like good ideas but are largely unproven sketches off the drawing board.
What do you do? Why?
In a later post, I’ll reveal what I think should be done–knowing that the choice has a lot to do with the individual psychology of those responding: stage of life, gender, experience, education, etc., etc., etc.
If anybody else wants to try, please feel free.
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