Economics, Investing, and The Basics Part 1
Teucer
Yesterday, I read an article by PigInZen about how to spend your first 90 gold and how to become self sufficient while making money. The problem most players encounter is that they don’t know how to acquire the gold necessary to do such a thing. Today’s article will be the first in a series of articles aimed at helping inform players on how to make some money, how to save some money, and how to foster your portfolio.
The biggest problem for new players is that they wait about a month to acquire enough money to start any real investing. Many burn through that first 10 gold in no time at all with absolutely no plan because they are excited to finally have some money. In this article, I will be presenting some basic principles that should be considered and put into practice in order to begin your first step into the business side of eRepublik.
First, join a military organization. This serves the dual purpose of allowing you to save some money and make some connections. Most military organizations supply their soldiers with food and some weapons, which will help you save money on things like food to sustain yourself. Food isn’t terribly expensive, but the money saved can add up over time. Also, this is a great way to make some friends as well as potential business connections. Those friendships and connections are invaluable and will serve you well down the road.
Networking is critical.
Second, don’t blow the money you get from medals or level ups immediately. Weigh your options and don’t sink all of your gold into your stats. In the end you’ll just end up wasting money that will only have short term effects on your account. On the flip side, don’t start stockpiling gold that you never utilize. Money that is doing nothing is being wasted just as much as spending it with no plan.
Time is money.
Third, risk is always a part of investing and you should learn to get used to it. The fact is, you can’t just absorb information and be right every time. The best way to learn is to do and that means you must be willing to try different things in order to grasp each facet of the economy. Things like hiring workers, investing in the Monetary Market, or even gunning for a Battle Hero can’t be learned by theory and numbers. They can only be learned by jumping in and seeing what works for you.
Weigh the risks and be confident in your choices.
Fourth, you must diversify your portfolio. Too many players get caught in the trap of being heavily invested in one market. The problem comes from the fact that players only see the potential profit and do not consider that things can change in an instant. If you get caught in one market that suddenly plunges, you can watch your 10 gold suddenly turn into 5 gold. Then, there is no way to recoup those losses except to eat them and try again. Diversification protects your overall portfolio by allowing for losses in some areas. For example, if you get nailed on USD you can make it up in the BRL, PLN, or some other currency market. The goal should be to have a little bit everywhere. This includes playing both the regular markets and the Monetary Markets.
Diversify. Diversify. Diversify.
Lastly, your portfolio is unique. Another trap players fall into is that they invest without considering their own portfolio. Just because some guy on IRC says that he’s doing really well in grain or iron or whatever does not mean that you will. Your set of circumstances is different than everyone else’s and you need to consider your required rate of return, your current investments, and how much risk you want to take on before you make an investment. If you don’t, you could watch what you have disappear in an instant.
You are unique and so is your portfolio.
I hope you as a reader can take some of these principles to heart and make a little money. Remember, you will only make a terrible decision once. That’s because you won’t have any money afterwards to try it again. Be smart, be confident, and be prepared to learn. Anyone with questions can feel free to drop me a PM or track me down on IRC (I can be found lurking in #TC most days).
Finally, I leave you with more Amber Heard.
I love to hear opinions and comments, especially if they are contrary to my own or from young players who want to learn this game!
A silent nation is a dead nation. Speak up and be heard!
Comments
Votado
Good article.
thx v+s
Voted for Amber Heard.
Must...stop...staring...
"Heard" that.
This article is good information.
Voted.
Good start-up suggestions for novice players, voted.
Voted, Good Advice!!!
V!
Good Tips, Thank You
Newb love. o/
Very useful thank you.
Voted and Shouted!
Very good article
Now I feel bad. I used to preach to my new Level 1 employees to save gold, save gold, save gold. I'd go on about how you'll need it later. I'd buy them food so they could work at high health and beg them not to buy health kits.
I don't do that anymore. I got tired of smackin' my head against a stone wall. I hope people read this and take your advice.
Excellent basic advice. Experienced players KNOW where you're coming from.
Like Thedillpickl, myself and many others found out the hsrd way... "stone walls", constantly making substantial impact upon one's head? not so good.
But I'll keep on keeping on...
BTW.. this is ESPECIALLY good advice as eAmerica moves into a "new economic strategy". Thank you Glove.
For the most part, the economy is still severely flawed so as far as businesses are concerned, I wouldn't consider any of them "investments" - at least not with any RL correlations.
But other than that, good article. Subscribed & voted.
Good work!
Just because the game's economy is flawed doesn't mean it doesn't have RL correlations or operate under similar principles.
As far as investing in businesses, there isn't any correlations. I own several businesses and have invested in others as well. I've also run quite a few businesses in this game for quite some time.
Investing doesn't only apply to businesses. It applies to currency markets in the case of this game and I know this because I traded on the MM for a long time. When you speculate currencies you're making an investment. You're also making an investment when you purchase a business in order to run it and make a profit. If you do nothing with that business you've made a failed investment and have wasted the opportunity to use that money elsewhere.
I wasn't talking about he MM, hence why I said "as far as businesses are concerned".
Back to talking about businesses, none of the key factors investors (any accredited investor, angel or VC) look at when investing in businesses in RL exist in this game. That's why there's no correlation between investing in a business in this game and investing in a business in RL.
I said the article was good and I voted for it. I am just pointing out that investing in businesses in this game is nothing like RL. The key factors in the success of a company don't exist in this game.
Yeah and it doesn't help much that working as a manager have killed basic business concepts as well. You can eke out ridiculous profit with no effort involved.
Yep. A business has no way to differentiate in this game. No way to vet employees. Businesses can't fail, the owners can just pump in more gold. That means businesses have to compete with businesses that continually run at a loss, with no end. There's no inhibitor to market. There's no "secret sauce". There's no strategic partnerships, no realistic way to provide value-adds...
Erepublik would be much better served by allowing players to build apps to assist in all of ERPK's shortcomings, and sell those for other players to use. Imagine if someone could build a company manager application to take care of all of the tedium of running a company, then sell it to companies for 5% of their gross revenue.
Exactly. I have something along those lines in the works for a future article actually. Keep your eyes open.
Great article, subscribed.