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Ask HN: I made $24k over the last month. Now what?
132 points by maxklein on Jan 18, 2010 | hide | past | web | favorite | 199 comments
I sell apps on the app store. A lot of small cheap apps. Revenue is hitting $1000 per day on the weekends (Here is the graph: http://imgur.com/T0z5p.png).

But I'm facing another problem. I don't know what to do with the money, how to use this very large monthly income to actually make myself rich. The app store income is going to end soon enough - the ecosystem is pretty fragile. Now that I have this raw cash, no debts, have a job I enjoy, don't want or need a car, my apartment is perfectly comfortable, what can I do?

I do NOT want to invest in the stock market, or invest in anything long term like bonds or property. I want to somehow use the money to make more money quickly (within a 2 year time span). But I have no idea! What I know how to do best is the app store, but I want other type of things that do not require much time investment, but give as good returns as that.

What do I do with the money? How do I invest it in making more money quickly?

Hire people to do the things you do which have the worst tradeoff of hours expended per unit of value added. Alternately, hire people to automate those things.

And I'd SERIOUSLY consider at the very least a) setting yourself up a SEP-IRA and b) socking away the maximum in an index fund. It is essentially monopoly money to you anyhow at the moment, right? Trust me, you won't regret having 30 years of appreciation on your monopoly money when you retire. (This will also simplify your tax planning for this year.) Index funds are a no maintenance investment -- as long as you can pretend that the money doesn't exist, you can get by with checking them once a year (or less!)

Yes, listen to patio11.

I do NOT want to invest in the stock market, or invest in anything long term like bonds or property. I want to somehow use the money to make more money quickly (within a 2 year time span).

Excuse me if I'm too harsh, but you should spend some of the money on a membership in Gamblers' Anonymous. Because you talk like a bad gambler. The hallmark of bad gamblers is that, if ever they get ahead, they look desperately around for a way to lose so they can get back to their comfortable status quo: Grifting, in poverty.

If you have money that you don't know what to do with, put it in some diversified investments that will make money over 30 years -- not two -- and forget about it.

The exception I'd make is the one patio11 cites: If investing a portion of your current profits in your current business will pay off, do some of that. But don't invest all your profits in this one basket: One of the most important forms of diversification is to invest in things other than your current project. You don't need another get-rich-quick scheme: You have that, and it even seems to be working. Good for you. Now hedge your bets with a get-rich-slowly-but-safely scheme.

The hallmark of bad gamblers is that, if ever they get ahead, they look desperately around for a way to lose so they can get back to their comfortable status quo: Grifting, in poverty.

You appear to be using a very roundabout way to say that there is no reasonably safe way to turn tens of thousands of dollars into hundreds of thousands in 2-3 years. If that's what you mean, just say so. Implying that everyone already knows this by insulting the OP doesn't really have the same effect.

Okay. There is no reasonably safe way to turn tens of thousands of dollars into hundreds of thousands in 2-3 years.

Was that tepid enough or should I also insert a series of sleep-inducing legal disclaimers? ;)

The above advice is utterly conventional. Every reputable book on investing says it. Indeed, most books and pamphlets on how to get rich quick say it as well, in the footnotes that nobody reads. The brain slides off such disclaimers like water off a duck.

So one tries to find a more dramatic way to say the same thing.

And while I'm explaining things I thought were obvious: The OP is not a gambler -- or, rather, he has placed an intelligent bet and won: He is now making money hand over fist by building products that sell. Nothing wrong with that. Except that now the OP seems to be having that unnerving feeling -- which everyone gets at least once in their lives -- that he's missing out on something big, some kind of big secret to moneymaking that the cognoscenti know. And, indeed, there are people who make amazing amounts of money in 2-3 years. They do it by gambling -- and when gambling works, it works. It just doesn't work very often, and you rarely hear from the people who place risky bets and fail. One's mind often fails to register those people. Sometimes you have to take deliberate, dramatic steps to make yourself see them.

I disagree. Investing in the stock market is far from safe. Not even an index fund over a 30-year period; we don't know what will happen in the next 30 years.

I didn't say to invest solely in the stock market. Some in stock funds. Some in international stock funds. Some in bonds. Some in a bank savings account. It's called diversification for a reason. You can buy more than one Vanguard fund almost as easily as you can buy one.

Time to plug Bernstein again:


What you don't want to do is spend all your time reading hysterical ravings on the Internet and then somehow conclude that it is actually safer to blow all your money at the track, or on some crazy scheme to "double your money in two years". I don't care how scary the stock market is: It is less scary than whatever you plan to do to double your money in two years.

I always agree with you on these financial topics =) I remember back in October 2008 when we both commented that the best time to sink money into the stock market is exactly when everyone else is pulling out in fear. (I was 22 at the time and my most conservative index funds are currently up ~35%... individual investments have garnered even better returns)

When the majority of people conclude that the "stock market is too risky", they usually look at the single problem of their investments tanking without looking at the bigger picture... which is:

First, if you invest money without setting a stop limit (rule #1 of investing) then you shouldn't be investing.

Second, if you invest in a quality index fund and you somehow do lose a majority of your investment (>50%), there are much larger problems at hand than just the loss of money. We're talking major economic / political / global unrest.

After witnessing the Sept 11th downfall and the October 2008 crash, I've come to the conclusion that there needs to be some damn serious issues to cause a significant loss in investments... Again, all of which could be avoided through proper diversification and setting financial loss limits.


As a side note, I do think many people got lucky taking the "too big to fail" approach with many banks that ultimately received government guarantees. I do believe, however, that the snap-back we experienced in 2009 is NOT going to be the same in 2010. Obama has spent insane levels of money to prop up the economy and this sort of stomach-churning level of gov. spending simply cannot continue. 2010 will be the year for finding individual companies that have survived the recession trimming, but I honestly can't see the DOW/S&P indices going much higher.

Up to a point that's correct, but not substantially so.

Index funds are typically managed (for a very low fee) in such a way that they track the market. That means that to lose all your money the entire market has to completely collapse to $0, which hasn't yet happened and probably won't.

This is different from investing in a single company (or indeed in a house) - single company stocks have frequently reached $0, and houses can get caught up in natural disasters. Gold melts, paper money burns, people die, startups fail... but the weighted average of the market only suffers from a little bit of irrationality every now and again.

EDIT: It's also possible that the company managing the tracker could go bust and/or make a huge mistake. That did happened to one UK index fund and cost the participants about 10% of their accumulated capital. Spreading money around is the only way to limit your losses when the universe decides to hand you a truck full of bad luck.

It doesn't have to be safe. It just has to be safer.

You wouldn't tell this guy to learn to day trade or go into real estate. He's not going to buy savings bonds or open a money market account. He's not going to put it all down on gold.

So what is he going to do with his money?

The only thing that could be "safer" about it would be to invest in the stock market as part of diversification.

Seems to me for any kind of investment, there are risks that could destroy it - houses can burn, companies go broke, money can be devalued, and so on. So some diversification is essential.

I know you said 'no stock market' but it really could be a great move for you. I perfer stocks that pay a dividend because even if the market moves downward you're still throwing off cash every quarter. AT&T pays a nice dividend, so do Verizon and DT because of their long term phone contracts. Other good choices are Kraft and Johnson & Johnson, these are consumer staples that aren't going anywhere and that will pay you to own their stock whether it goes up or down in price.

It's not a '2 year high return' but like some of the other commenters have said, you're not going to find that.

Congrats on the app store success, I'd love to pick your brain. I'm currently working on some games for the app store , what type of apps have your written?

There is another benefit of a sep ira -- Since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCA), it is protected from bankruptcy. There are a thousand things that can go wrong in life -- and while you seem immortal now, bad stuff can and does happen. You can withdraw money early out of an ira by paying a 10% penalty and taxes. If you have an ira and bad stuff happens, you should NOT withdraw money from it. Instead, it's better simply to spend everything else first, then rack up on debt and go bankrupt, knowing that you have a sizable nest egg waiting for you on the other side.

First, congratulations; that's a pretty impressive feat on the app store.

Have you thought about taking some of the income and using it to hire other developers to increase the number of apps that you've got being developed at once? It seems like you know what works and doesn't work on the app store, so it would probably make sense to start trying to make your efforts scale up.

i echo the congrats and everything else icey says, basically.

things that i would add:

- consider just sitting on (some/most of) the money for a while. you don't need to make a big hasty plan and execute just because you have some cash to spend right now. thats not to say do nothing. just don't throw all your resources at something immediately just because you have the resources to burn.

- diversify. as you said, the app store won't be forever. try looking into other things that are either just becoming viable for development, or things that are going to be longer-lasting.

- pad your account. no matter what you do, there will be dry times and hard times. make sure you're good to go for that. stash some money away while you have it.

Perhaps port to other smart phones, like the Nokia n900 or Android phones. I Don't know if this is worthwhile, but perhaps worth keeping an eye on.

The poster expressed the sentiment that the app store ecosystem is fragile and the income will end. If you believe that, investing in hiring more programmers for apps would be a move counter to your own beliefs.

Since I tend to agree with that assessment, I couldn't recommend doubling down on building apps.

There may be other good reasons to consider that, such as moving in another direction (consultancy, which raises the interesting question: is there a such thing as iPhone app consultancy?), but not for that reason alone.

Edit: Google says that there is such a thing. It strikes me as likely that would be more stable long term, and, potentially, even more lucrative.

Noodle had an excellent point about diversifying, so I won't go into that too much.

However, there is still a metric shit-ton of money to be made on the app store. I don't see people leaving it in droves immediately. He knows how to make money in this environment right now, so in my opinion he should spend at least some of the money he wants to invest on something he already knows how to do well.

I just don't see the wisdom in avoiding a marketplace you already know how to make money on; even if it has a chance of going away. Max has already proven that he is able to identify a market and take advantage of it once, who is to say he couldn't take advantage of the "next big thing"?

Yeah, i'd take at least %50 of your income, and put it in various things, some CD's, some foreign currency investments, govt bonds (tax free), etc... Then save the next %25, for rainy day's in an account, interest rates are terrible right now, so you might try one of those savings accounts which earns miles.

Then with the last %25, use that to invest in more appstore / development projects.

I agree that the app store ecosystem is fragile, but the poster seems to know how to make money there now. It also sounds like his current business model is small investments that generate quick returns. If he keeps to the same model, but with a little outsourced dev help, he could make more hay while the sun is shining.

jerf, Can you explain further how Google is endorsing some kind of iPhone app consultancy? I haven't seen anything to make me think they're pursuing this.

To add to icey's comment, why not use the money to develop a framework (or build on an existing framework) to be able to port your apps to other mobile platforms?

Yeah, why invest in some company you don't know anything about (stock market), if you can invest in yourself?

You shouldn't ever invest in a company you know nothing about. If you're investing in the stock market you should do you research into the company before buying in.

But how do you find out anything about another company? Safe for visiting them and getting a tour of the office, I don't see how?

You have a revenue generator model that's proven and works.

Why not do more of it? Scale up?

Actually, that's a good point. Could you invest some of that money in another developer to speed up dev and iteration? How about a cheap marketeer to spread the word online about your apps?

i concur - as of now, scaling up could (but not necessarily ) mean having a captive outsourced team and capitalizing on your brand.

Pay your taxes. After that, it wont seem like all that much money.

Incorporate to soften this blow.

If the OP is a sole proprietor in the United States, then incorporation won't alter the tax burden.

Incorporation is still a good idea, for other reasons (simplified banking, limited liability, etc).

Limited liability is a very good reason to incorporate, even if it costs you a bit!

Luckily for the OP he is likely in a relatively safe position. If his app store money fails, he likely has the talent to quickly jump into a development job somewhere else, and not have any capital tied up. So long as he keeps well away from debt, incorporation isn't a big deal. However, as he stated he wants to make more, which tends to incur risk-taking, which limited liability is ideal for.

I've seen several horror stories of genuine hard-working people lose almost everything because they were fully liable. Yet I've seen some very lazy, non-talented people lose virtually nothing because they incorporated. I know of one guy who lost hundreds of thousands, and still managed to retain control of his business after the banks stepped in. They now own ~40% of his company, but he's still earning the same wage.

Forming an S-Corporation can reduce your tax burden. The filing is a bit more complicated and you have to pay yourself payroll, but you would be looking at reducing your tax burden on a portion of your income by about 7%... That is, going from 25% tax rate to 18%. Definitely worth doing.

Incorporation can help with U.S. taxes by enabling a tax-free retirement account with a large contribution limit. (SEP-IRA has a 25% of salary / $49k annual contribution limit.)

Important note: incorporation is required neither for SEP-IRA nor for my favorite, the individual 401(k).

I stand corrected. Thanks!

Invest the money into the business before paying the taxes. It'll seem a little more ;)

Market yourself. Write a book & give talks about your process for making winners. Lots of people want to know how to make money in the App Store. There might be a higher-priced corporate training market for how to make popular apps for marketing purposes (think packaged food or sports apparel industry).

On reading your blog it looks like you're already going down this road?

Ehh, anyone who bothered to email me has gotten the stuff I know for free. I don't want to give any talks or write a book. It's easier and less stressful to just make the apps.

Yes. Just make sure you also publish on your blog or so the stuff you send out in emails. That helps build a reputation, in case you need to resort to writing a book or giving talks (or doing some other corporate training as a consultant) later.

You might also use some of your money to pay another guy to polish your writing. Or to compile it into a book.

Well, your post was about what you can do when you can't rely on the apps for income anymore. Personal branding is something that you can capitalize off in many ways.

Hrm, I think you're forgetting about the most important money making tool available: compound growth. Let's assume the following:

You invest your current 24,000 and each month you add 20,000 to your investment. Let's further assume that you can achieve an annual return of 3.5% and that return is evenly distributed over the year. In this scenario you'd end up with $520k after two years. You're half way to being a millionaire.

If you instead contributed $25k each month you'd end up with nearly $650k after two years. That's 50k above your contributed principal or an 8.3% return over two years. Further, your risk is significantly reduced over any other get rich quick scheme and this allows you to continue to focus on what you're doing.

Remember, that's not inflation adjusted. It's a common banking advice though. (Not a stupid one).

As for your problem, do what most people say here: invest in the best asset you know: your business model. If you are very lazy, then just simply figure out how to let someone else do the work.

And I wonder if you meant that question seriously? The wording sounds awfully naive.

Not inflation adjusted but given the short time frame near 0 inflation (in the US) means a small return still allows for growth. A 3.5% annualized return is also a very conservative target.

The biggest asset that you have and the one that can create the most money for you is yourself. Yeah, that sounds really cheesy, but you've already showed that it's true.

Invest the money in yourself. Bank it and use it so that you can ensure that you aren't going to need to spend your time making somebody else money in the future.

Some people have said to invest it in companies...the thing is that you are a company and it sounds like you're a pretty profitable one.

I completely agree with you on this. This guy clearly knows how to successfully conceive, develop and bring an idea to market. There must be countless ideas in his head. Invest in those!!

I would focus on whatever you can do to keep your winning streak going in the app store. Why search for another get rich quick scheme while the one you have is still working? Most schemes don't work, so focus on optimizing your milking of the cash cow.

"What I know how to do best is the app store"

Set yourself up as an _angel investor for iPhone apps_. Like a mini-mini-mini YCombinator.

Based on your experience, you should be very good at evaluating an individual's chances of creating a successful app. Solicit pitches (HN would be a great source) and make 5 small investments of $5k each.

If you make another $25k next month, do another 5 investments. Rinse and repeat.

You probably can't produce 5 apps per month on your own. But you can use those same skills to invest in 5 apps per month. There is greater risk (you could lose all 5 investments) but also greater reward (each investment could in turn become its own $25k-mo company).

Good luck!

I'm not sure why you linked to that, but if you're suggesting that the OP must become an accredited investor in order to angel invest, then you are incorrect.

I will fight your link with another link:


Actually, there is one thing I can do perfectly now: I can listen to an app idea and tell you how much money it will make. If I knew developer who needed 5k to make apps, I'd def invest in them. I don't know any however, the ones I know don't need 5k.

Hedge the risk incurred by your "mini-venture app fund" with other peoples money.

Given your track record with app development, there would certainly be demand from third party investors for the expertise you bring to the table. Simply offer investors less preferable terms than those you are able get from the app developers that pitch their ideas to you.

Not the easiest approach, but after addressing any regulatory hurdles, lining up investors and getting a system in place, you can focus on investment opportunities and leverage up the capital you are currently earning.

Your passive investors will be more likely to part with their money if you have some skin in the game yourself. This will have the added benefit of allowing you to diversify into a wider range of apps with higher monetary barriers to entry.

Any tips on evaluating app ideas?

It's a complicated collection of things, but a lot of it boils down to: how many people will get what the app does from the title and the icon. And also, will your consumers search for the app?

For example, if I had an app called "Table Tennis" it will make money. If I had an app called "River" it is less likely to make money, unless strongly externally marketed. First app has search right from release, and everyone gets it instantly. Second app says nothing from the name and nobody searches app store for "river".

You need a constant low source of users for word of mouth to work.

Turn this into a service.

Be wary of trying to recreate the success using a similar but different model. Many people fall into that trap and fail.

For example, if you carefully built apps and they seem to be selling well hiring a bunch of people to build more apps may not work. The apps may not be of the same quality, you may not be able to communicate your vision adequately to them, and maybe just timing is incorrect now.

Personally I would continue doing everything you are now and completely ignore the money side of things. Pay your taxes and pretend that money doesn't exist. Keep progressing forward and see if you can continue increasing revenue.

Use some money to cut corners if you can, but throwing a bunch of money at a problem doesn't tend to have a good success rate.

edit: Also by looking at your uploaded image - it looks like you half your income this year is from the last month. Try to keep pushing growth forward, whatever you have been doing is working well.

What I know how to do best is the app store, but I want other type of things that do not require much time investment, but give as good returns as that.

What do I do with the money? How do I invest it in making more money quickly?

Little effort, fast return? Then you need to take high risks. Is that really what you want? Maybe you'd be better off trying to scale your skills (which have gotten you this far) by expanding into other platforms/niches? Contracting out some of the work could help.

I once read

  "Never give financial advice for free: 
  if it is good advice, you won't get credit, 
  and if it is bad advice -- you'll get the blame".
You should consider why anyone here would give you advice on how to turn xx,xxx into millions quickly. HN is full of smart people who are fully capable of getting their hands on that much in vc/other leverage and doing it themselves. Any advice they give you, from a purely competitive standpoint, erodes their chances of success.

tl;dr - If anyone knew of a way to turn 24k into millions, why would they say how to do it for free?

If anyone knew of a way to turn 24k into millions, why would they say how to do it for free?

Because people are social creatures and often take great pleasure in talking about something they know a lot about and may have difficulty finding many people that really want to listen/discuss it. Besides, as gets stated here often, a great idea isn't worth much. You still have to put in the time and effort to get any payoff. So it's not much of a threat, really.

Someone smart enough to create a black box (which a million dollar business never turns out to be) that takes input of 24,000 and returns as output 2.4 million is not going to give it away at a marginal cost.

He's asking, in essence, how to get rich quick. If i have a grq idea, i'm either already doing it and getting rich, or planning on doing it (raising capital, finding co-founders, et al).

A lot of excellent ideas are viewed as "crazy" when first proposed. That is probably a bigger reason you aren't going to get a qrq scheme from an online discussion: Either they are burned out on trying to convince people casually or you won't recognize it as brilliant. And that comes back to my earlier remark: An idea isn't worth that much. Execution is what brings in the money.

That still won't prevent some folks from wanting to discuss it just because that's the kind of thing that floats their boat. Maybe you aren't that type. Some people aren't. But some people just like talking about stuff. <shrug>

Ok, I'll bite. I just don't like talking about this sort of thing because it often devolves into scammy ideas. For instance here is a dead simple way to make money if you are really hard up:

Build a site where the only goal is to serve ads and get visitors. Give away N of your ad revenue to a random visitor. Write viral hooks into it to propagate it faster. Of course it won't work for long - someone will eventually try to increase their chances by registering thousands of accounts - but while it works you could probably make a ton of cash.

Edit: perhaps with his appstore experience he could do this on the iphone - figure out a way to make it cost prohibitive to register thousands of accounts by tying accounts to a phone number?

I think you and I probably see this much the same. It's not like I've made any grq suggestions. I'm just one of those annoyingly chatty people who likes to talk -- and it gets me in hot water all the time. I have refrained from suggesting that this is a bad idea because a) sometimes a discussion is useful to someone, even if it doesn't accomplish the stated goal and b) long experience tells me that no one wants me to rain on their parade and say "Gee, that doesn't sound like a great thing to be asking".

In addition to your concerns, I will add that people seem to typically get rich pursuing a niche market which is a good fit for them as an individual. Which means a potential billion dollar idea is only a billion dollar idea for some people and not just anyone....um, which comes back to "execution", I think. :)

Nice chatting with you. I should probably shut up now and let people carry on with discussing what this individual might want to do with their money.

Because there's more than enough customers in the world to everyone else wealthy too?

I want to somehow use the money to make more money quickly (within a 2 year time span).

As others have pointed out the best asset you have is your ability to crank out mobile apps that people are willing to pay for. Not to burst your bubble, but even $24k a month is nowhere near enough for you to kick back and watch the returns flow in. The investment opportunity you seek--short term, high return, low risk--simply does not exist. If anyone attempts to convince you otherwise, reach for your wallet, because you are being had.

My honest opinion is to bank the remaining after taxes - especially if you don't have six months living expenses set aside in a money market fund or something like that. If you do have that, then use it to buy other people's time to make your small apps.

Nice work. I hope I can have this problem some day!

Build a business using it. Pithy version:

1. Look for a niche that hang around online, but don't know much about web stuff. Mumsy things, crafts... anything that's a tightly knit niche

2. Find their forums/blogs etc, and ask them what would make their lives easier? What would be the one thing that would be awesome that they want.

3. Build it. Possibly hire people to help you

4. Have a free, lightly crippled version (so it's still highly useful and awesome, but clear there's more awesome where that came from if they cough up)

5. Hire (hint hint) an awesome marketer and copywriter to design, write and perform ongoing analysis and optimisation of the sales funnel, traffic generation and site navigation

6. Reinvest the money in entering more niches, and refining the process

You should be able to launch a site a month, with an average sales volume of 7-15k from each site after 6 months or so. 12 months down the line, that should be earning you upwards of 100k p/m sustainably, with a max of 4 employees. I'm fairly sure you can live off that.

As bioweek said, I've wanted to try this for some time. If I could get past step 1 and 2, I'd be happy to do this. Also, could you give us more detail on your ongoing analysis process? I'm very interested.

I'd love to try your advice but I've never been able to find such a niche. Everytime I try to think of one, I get "niche block". Any ideas?

Got a passion? Helps if you have a real interest in an idea. I've found that first-round attempts I've made at sites have been successful (got a few sites that took very little time to set up, but now make $4k/mo for zero effort), but attempts to replicate that have failed (have a few more sites that barely cover their domain registration costs!). Without the passion, you would need to be very disciplined, I suspect.

Here's something I just tried to see if it might help someone looking for a niche (since almost all are massively saturated, at least at first glance):

Hit Dmoz, control-click five sections on the front page. For each tab that's opened, choose a sub-sub-cat pretty quickly (maybe don't overthink your choices, but don't necessarily go for the largest option). If necessary, choose again on the next level. That should give you five things to look into further. I ended up with:

Never know what any of these might turn up. Lack of decent, dedicated blogs, need for small widgets, simple calculators/tools, etc. With anything though, unless you have confidence in your content or idea, I would keep it quick and simple and not invest too heavily.

That's awesome advice! Thanks. I'm going to try it. Are you available for mentoring :-)

Keep in mind that the Dmoz idea was just something I invented on the spot and may or may not be at all useful. An old bookmark I have is this from a few years back:


However, they're hardly niches and would be thoroughly dominated by MFA stuff already with little room to drive in a wedge. You could however pick a few of those, do keyword research on each and then pick a three-word keyphrase from that wider list to think about and focus on? I wouldn't bother going after a single keyword or even two-word phrase as the competition will be too fierce.

Happy to trade emails if you want to bounce any ideas off me. Can't promise anything useful or insightful, but hey, it's free to try! My background is 12+ years web development (backend and frontend) with side projects in forum/community, some passive content sites geared around AdSense plus bigger ideas that I struggle to find time to work on.

Even if you know the app store flow is fragile, I doubt anyone can tell whether it'll turn in 6-months or 6-years.

If you are an expert in making money there, ride that wave -- looking for something comparably-lucrative-but-different is a distraction. Optimize the hell out of your current flows -- find ways that spending $1 in marketing makes you >$1, create small variants, port to other platforms, outsource -- with careful metrics so you detect early when your strategies are played out.

Meanwhile, on the side, sock some away in a completely safe non-distracting portfolio. When it makes sense to turn your attention elsewhere -- either out of the app store opportunity ending, or a desire for something new -- then that safe cache of money will help. But at this point, you've already got a lucrative place to spend your attention -- why dilute it with other plans?

The internet thing to do would be to make a member-only site where you teach people everything you know about making money on the appstore, and charge 97$/m subscription. Run that for a year or two, then sell it.

At first that sounds crazy (run a get-rich-quick scheme, and that will get you rich quick!), but that's actually a pretty good idea.

Assuming you can pinpoint some of the secrets to your success (or, more importantly, things that sound like they will help people succeed), you can write a book, start a subscription website, etc selling those tips. Saying "I'm making $24k from a wide variety of apps, and it's just me in my free time" is a pretty good selling point.

That seems like an even quicker way to end the profit run. If everyone knows how to do this, the market will slow down and then soon my tips will be worthless since they no longer work. Then I killed the goose that lays the golden egg.

It kills the goose, but creates the elephant that drops the golden turds. Which would you rather have?

Well, it's not a zero-sum game necessarily. But that is true. I guess it depends partially on what your tips would be. If you have tips, say, for getting on the top-25 boards, obviously sharing those will hurt you. But sharing tips for how to get websites to link to you, and even those to make better apps, won't necessarily hurt you noticeably.

Clickable graph link: http://imgur.com/T0z5p.png

Congrats. But let me tell you this straight: you are not making money (yet). You are now cash-flow positive.

So start paying up your debts. Did you say you don't have any? that's a lie: you owe yourself some (a lot) working hours for programming, distributing, promoting the app.

Also, you had to buy a mac which is also an expense, an iphone or ipod touch, etc...

Step one: sum all that money. Put it wherever you like and feel free to spend it: It's your delayed salary.

The next step is trying to figure out how much money you need to "forget" about getting money everyday.

Maybe 10k/month or 20k/month to cover all your living expenses and get all (physical) things you want without having to worry about money. Let's suppose you're happy with $20k/month (tax free, of course).

Step 2: How much money do you need to have to get $20k in interest ? Figure out that sum. Remember that next year today's $20k will be something like $19,002 or something like that.

First: Keep making money (selling your app, and building one or two more).

Second: Invest in something like bonds (us, corporate bonds, etc...) with good credit rating. You may earn between 1.5% - 8% yearly (if you can buy bonds at discount, better).

Third: Invest in stock, funds, etc... just follow the tide: don't try to outsmart the market because you will fail.

Fourth: When you have time, start looking at derivates. Then, build your own guaranteed-credit deposit with options and swaps. Beat next year inflation (mostly on autopilot).

Five: Enjoy !

Like others mentioned, keep in mind you owe about 45% taxes. 30% ish for actual taxes then 15% for self-employment tax. SO that 24K is really about 14K.

Also keep in mind that was during the holidays it seems or maybe after a few game launches that did well. You won't see the same level of revenue steadily unless you keep releasing and have good pricing strategies.

My advice, save it up or use it to reinvest in your own company for now.

Question for drawkbox: if this guy had formed an S corporation, would that have changed the self-employment tax? He'd owe taxes for his own income, but the S corp (IIRC) doesn't pay taxes, right?

The amount of self-employment tax is lower with an s-corp b/c your salary will be lower. With an s-corp you can also benefit from the standard deduction on your individual return.


Sole Propietorship: taxable income is equal to whichever is lower, gross income minus expenses or gross income minus the standard deduction.

S Corp: you subtract expenses from the corp's income, and pay your self, say, 60% of the remainder as salary, which is subjected to payroll tax. However, you calculate your taxable income by subtracting the standard deduction from your taxable income. The corp then pays its half of payroll tax, but you can take the remaining income (not paid to you as salary or used for expenses) as a profit distribution, which is only taxed at capital gains rate.

So all in all it can save a lot of money, particularly if you have business expenses (which in a sole proprietorship are eaten up by the standard deduction)...

Note: You have to do payroll every month for it to be legit with the IRS, and you need to file taxes once you create the corporation, even if your situation changes and you don't use the corporation for anything. You also have to pay yourself a reasonable salary. If you're a single employee S Corp then it may be wise to pay yourself > 50% of the corp's gross income as salary, to avoid arousing suspicion that you're doing the s-corp purely as a tax shelter.

Nope that tax is always there. Your employer covers most of it mainly in social security/medicare and a C or S corp will pay out of their coffers for that. So most full-time workers never see that hidden 15% but it is blatantly there when you contract, self-employ, LLC etc.

SE tax rate. The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).


When I contract, sell products etc. I expect to get about 55% of the revenue after taxes. That is actually a bit low but it is a good number to use to make sure you are charging enough. So if you work for $70/hr you are actually working for about $40/hr and so on.

I know it's risky, but I wouldn't count out the stock market.

With the whole financial meltdown, the stock market tanked, and there was no doubt they'd go back up. A year ago, even though I was 15, only had a grand or so, and needed the money a year and a half from then for college, I considered the stock market because I knew they were going to shoot back up (and they did).

So if it were a year ago, I would be screaming stock market at you. But now the Dow is back over 10k, so I see it as a much more risky move. That seems pretty high considering the current state of the economy.

But if you see it fall back down toward 8k, I would buy, as one can be pretty certain that it will be back around 10k sometime in the next 2 years. Also, right now, interest rates are in the toilet, but stock dividends from most companies are actually paying decent rates.

You'd have been SCREAMING stock market at him? It went down to... 7k? So if he had invested in an index fund he'd have made 33%... another 8k? I don't think that qualifies as GRQ, but ok

Note: not saying it's a bad idea, but he's asking for something to quickly make a LOT more money. Your advice, while likely sound, isn't going to accomplish that, unless he can pick one of those lucky stocks (like Akamai was at one point) that goes up 33x in a year.

Second note: What he is asking for is a pipe dream. If it was that easy to turn 24k into millions, there'd be a hell of a lot more people doing it. 24k isn't really that much.

Go read The Millionaire Next Door: http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/d... , which ought to be mandatory reading for anyone.

What do I do with the money?

Invest it in stocks or bonds.

How do I invest it in making more money quickly?

You don't. That's the problem: there is no way to reliably do this. In fact, there's probably no way to _unreliably_ do this either. At the moment, bank savings accounts and CDs are paying next to nothing.

As The Millionaire Next Door shows, most people who we might think of as "rich" don't actually get that way by being sports stars, or inheriting money, or TV, or whatever: they get that way by spending less than they make and saving as much as they can, usually in the form of investing in index funds.

If you aren't doing it yet: translate and localize your apps, then sell them in other countries' App Stores.

Seriously what ericb said, milk the app store and advertise your apps online if you can, keep it going but the investment climate is lame everywhere. I am now in the same situation where I had 30k cash for the first time with no debt and I essentially put it in a safety deposit box at the bank so I won't spend it. If you look at money market, CD's etc, they all stink right now so just lock it up.

If you have not bought a house yet then I would look into doing that and taking advantage of the 8k tax break for first time home buyers. Sounds like you have enough down payment to cover 20% and get out of the PMI insurance.

You might use that money to hire another developer you can train and crank out more apps, and hit the android market as well.

Do not buy a house right now unless you really understand your local market and it's very different than the national average. Home prices are going to drop like a rock this Spring.

What makes you say that?

I've read from numerous sources that the banks are holding foreclosed home off the market until the spring to keep prices high during the 'first time homebuyers credit'.

Once it expires there should be a large influx of new homes for sale which will drive prices down. It's a game of buying now for the tax credit and 'saving' $8,000 or waiting a few months and possibly saving $20,000 because home prices have dropped.

That is very interesting - thank you.

Do what I would do. Just take a trip around the world, and forget about it.

To quote The Sting: "I'd just blow it anyhow".

Nice problem; I hope to have it someday.

First: I echo the previous posters urging you to reconsider the stock market. It's low maintenance and is a nice way to diversify away from your business if you feel it's not sustainable.

I just reread your post and noticed the implication of "I do not want to invest...long term like bonds or property". If you plan to need/use the money within, say, 5 years (preferably longer) the stock market isn't for you--so you're doing something right there by not wanting to go with stocks. I just think that people are urging you to think long term

That said, you want to make money fast short term. I will add to those pointing out that this is generally difficult. However, you do have at least one good idea proven to work at the moment: your success in the app store. Your best bet to make more money quickly in the short term is to attempt to scale what you're already doing. Note: this may not be possible. I still think it's your best bet given the constraints you give. You're worried about time investment, but that's nothing that hiring someone can't alleviate (but not remove).

Finally, care to answer a few questions about your success? I imagine you're hesitant to share more identifying info, but how about things like what you do for marketing? Or how much time it took to get to this level, how many apps, and how much time it takes?

Get yourself a woman. Problem solved.

Can you share with us what apps you are selling on the app store?

i think that it's pretty clear that getting rich is largely luck. you were in the right place at the right time with the right skills. if it was more than that, then you'd be able to repeat it without advice, right?

given that, two approaches make sense to me:

1 - treat it as a lucky break and consider how best to make it last over the long term, as a one-off. but you say you don't want to do this in your question.

2 - try to somehow increase the odds of getting lucky again. you can use money to improve your chances in various ways: by improving your skill set; by allowing you to fail more often before you starve; by out-sourcing work not associated with "taking a chance" to someone else; by entering a market with a higher barrier to entry (where you need to invest more up-front) but with, hopefully, less competition.

perhaps the best approach is to see (1) as yet another way to do (2). in other words: invest the money so that you have a small but reliable income over as long a period as possible (a ramen fund, if you like), so that you can keep trying new ideas.

ps i think the biggest argument against the "luck" hypothesis is that very rich people tend to get richer. but i suspect that's because they exploit information available only to people in their position; $24k doesn't buy your way into that.

24k a month is near 300k a year... doing pretty damn well, if you can keep it up, but like you said, nowhere near very rich. The very rich get richer because, like Mark Cuban says, when they invest in a company, the CEO gives them a call and asks if they have any recommendations.

i didn't mean to imply 24k a month wasn't impressive (it's way more than i earn!), but the impression i got was that this wasn't going to last for long.

which suggests another approach is to use the money to find ways to extend how long this can last. for example, by porting to android.

I have the exact same problem.

And no, don't pay your taxes YET. I would actually invest in hiring some artists and developing even MORE apps. Maybe just outsource their development. It can be a lot of headaches but if you were able to code the apps yourself then likely you can extract decent work out of shitty Indian or Chinese consultants.

Or, find some people here in the states and convince them to work for you.

Keep growing your business. Become a player.

Or, retire to a cheap country and fuck girls and and enjoy life.

That's my advice.


Rather than advice, I have questions....namely, is there a list of your published apps somewhere? I'd like to understand the types of simple applications you're developing.


I am also interested in knowing this, if you are willing to share.

That question is best answered per email.

Great...email sent. Thanks!

Judging from responses here, and my own experience, I think you need first of all to make some life decisions.

Here are the questions I'd try and answer first:

1) What sort of life do I want for myself? Do I want to keep programming cool stuff as ecosystems come along? Do I want to manage programmers? Do I want to run a business, become an internet marketing guru, based on my experience, or try and live off of passive income?

The answers to those questions will shape your decisions, whether or not you're thinking about them. If you do think about them, you'll have a better shot at structuring a good outcome for yourself.

Based on your post, it sounds like you currently want to double down your current income on the hopes of getting 'rich'.

Here's what I'd guess: I'd guess this is your first 'business' venture. It's gone really well. You are used to seeing such rapid returns in business because it's all you know. You are now trying to invest more money than you previously have (since your time was not previously worth $24k / month), and trying to get the same rate of return.

You will do yourself a huge favor if you give up on this plan. It is incredibly unlikely to happen. I'll be clear: my guess is that you are currently experiencing the best ROI you will get in your entire life. Never again will you see these sort of _percentage_ returns on your money.

That's of course very different from what sort of _dollar_ returns you may see.

If you're able to give up on your high ROI dreams, you'll be doing yourself and your family someday a giant favor.

Now, if you're still on board with me, you're wanting to invest this money, but you understand you need to follow the basic rules of capital, make sure you can preserve your capital at all costs, and need some way to deal with your total incompetence in the area of financial investment, while learning, and without losing your nest egg.

Simplest advice here is to 1) choose some areas you're interested in, 2) give yourself a couple _years_ to fully deploy the capital in those areas of interest, 3) keep 3 to 6 months liquid assets in case your business blows up.

If I knew no more about you, I'd probably go with some average of the advice here:

Split up your money into

a) reinvestment, become an app store publisher or app store angel investor with 33% of your money. Stick with what you know here, and it will magically become investing rather than 'gambling'.

b) cash -- 33% toward high liquidity cash alternatives until you've got 6 months or so set aside

c) long term investment -- 33% into index funds, split up between national and international super low load index funds

Don't forget to hold onto .3-to.4x of (Revenue minus a) for taxes, or .4xRevenue depending on how you structure your investments.

So that would equal like:


- 3k living expenses

- 7k deductible investment (a-la signing up apps to publish them)

- 7k taxes

- 3k cash

- 4k long term investments


super-smart young business person.

That's not quite what my upper paragraph math was, obviously the more you can put into the deductible column, the more efficient you'll be. You could rebalance it to like 4.5/4/5 or so with the balance going to taxes, if my back of the envelope calcs are accurate.

I saw this book when Paul Buchheit shared his amazon history, haven't read it. How to Be Rich by J Paul Getty.

Also, read this, http://blogmaverick.com/2006/01/02/my-investment-advice-for-... & this http://blogmaverick.com/2008/10/04/how-to-get-rich/

Lots of people saying 'invest in yourself'. I'd take that a step further and say 'invest in your company'. If you haven't already, set a company up and hire someone to do stuff like customer support, basic marketing, etc. Do your books yourself, with a CPA's help (and with his financial planning), or have a relative do it. My wife does all our bookkeeping for our startups. Don't trust a stranger to do your books!

Get a basic plan together on how you are going to grow the business, then take it out and talk to a) companies in the same space, and b) VCs. Get feedback and adjust accordingly to what feels right. If growing the business takes outside capital, raise it. If it doesn't, then start down the path of growing the business (according to your new plan).

I think investing in other startups is bad advice. You aren't making that much net right now - maybe on the order of $14K net a month past taxes. It's a good living, but if your sales are dependent on continued development/advertising/luck/whim of Apple, I'd be REALLY careful about expanding spend to fill the income.

Out of curiosity, which apps did you do?

So, you'll probably get about $100k until the income is gone. If you keep working, you have 50-50 chance to keep going for a longer periods of time - most likely less than that.

There's no way to multiply that little money in just few years by investing it without jeopardizing it all. You won't even qualify as a professional investor as you don't have enough money for it, so your options would be limited anyway.

If I was you, I would try to milk the app store as long as it's good and network like crazy while doing so. Focus on quality, not quantity - find out the guys who actually get top-notch shit done. Get yourself known, you should be able to build some steady secondary income by telling how you did it and how iPhone apps should be done.

When your app store income is drying up, you should already have $100+k in the bank. Go through your network and find some other overachievers who are bootstrapping a startup with a solid business plan and who need your skills. Apply some of your capital as a seed money to get leverage. Work your ass off for a while. Profit. Retire or repeat.

Good work. If this is solo, then I add my voice to others saying hire a few people with half and save the other half.

You say you don't want to invest, but since California is in the first stages of being hit by an epic storm system that will play out over the next 2 weeks, civil engineering businesses on the west coast are about to be handed as much work as they can handle.

Or talk to pg about putting some into ycombinator. With the relatively small investment to each selectee, you don't need massive amounts of capital. You could even stage your own little competition on HN and offer $500 or $1000 plus your (probably more valuable) management guidance to three worthy candidates whose apps impress you in exchange for a share of their revenue.

> Or talk to pg about putting some into ycombinator.

Is ycombinator taking investment? I thought it was closed.

It sounds like you want to invest the money in yourself, which is understandable and entrepreneurial.

As life continues, you'll find yourself with increasingly more disposable money (hopefully), and directly investing in yourself doesn't scale (either it's too risky or you can't use it to make yourself more productive).

Sadly, eventually you have to invest in other countries, companies, assets, or people; in short, invest in something you wish you could control more.

It's a good yet stressful problem to have, but maybe the most comforting tidbit in your case is I doubt the windfall you earned is a one-time thing. The lottery winner or not-so-bright heir to a sizable inheritance is in worse shape.

There's nothing wrong with continuing to ride a gravy train you know is going to end (or at least slow down) as long as you don't convince yourself it's going to keep going forever.

>I want other type of things that do not require much time investment, but give as good returns as that.

Why do you not have time? I presume you are referring to the time required to, say, manage rental properties? You've already proven that you're very good at creating software users want to BUY(!), so why not take some of the time that this money affords you (pay a maid, etc.) and figure out something more substantial to build while you're still able to milk the app store cow every morning?

Seems like there MIGHT be some real estate opportunities in some parts of the US. Short sales in Vegas or parts of CA might be interesting. Income properties (strip malls) might be available for cheap. Fourplexes, too.

I tend to lean towards our current irrational spending/printing resulting in hyper-inflation (or at least inflation) though plenty of smart people support deflation, too. If you buy the inflation arguments, don't keep your money liquid. i.e. If you buy a $500k house and inflation drives it (any everything else) up 10x to $5m, you bought a $5m house for a song. If you keep $500k in the bank and there is 10x inflation... Ouch.

I am quite sure there is not going to be any inflation or hyper-inflation. The U.S is spending a lot, but it's also very very high income. And a lot of countries have no interest in one of the biggest consumer group for their products disappearing.

The U.S dollar will stay weak because this promotes manufacturing, which is what the U.S needs to be doing right now. But it will not weaken much more.

The one thing you can use to measure the long term financial stability of a country is its infrastructure, and when you start seeing roads decaying then start expecting inflation in a year or two. Till then, things are fine.

Wow. You are "quite sure" and feel that crumbling roads is a leading indicator of inflation? I generally make a point not to be snippy on Hacker News, so I'll just post some links and a suggestion to not say you're "quite sure" when you aren't (or really shouldn't be).

http://en.wikipedia.org/wiki/Inflation http://en.wikipedia.org/wiki/Deflation

Kudos on the success, though.

Keep making apps, use the money to hire people to work with you, and then soon, FOR you. That's the endgame here. If you don't want to do that, hire a financial advisor. They can tell you how to invest it that will suit your wishes.

I would think about monetizing your experience of making money through apps; take a small amount of your money and create a resource for building and deploying cheap apps - this could be in the form of a PDF, etc. Add a dynamic element like 2 hours of personal consultation. Sell at a few price points and package this through a new app "Learn to sell apps app" - buyers need to get the app to get the PDF.

This type of strategy leverages your experience & diversifies your revenue streams w/ very little capital requirements....to make serious income you want to move beyond just creating apps which may have very short life spans. Good luck

I think the answer heavily depends on how confident you are in yourself. Do you feel your success was a fluke, or could you mimic it with something else? Having 24K in capital is great, but if you know anything about the tech startup space you'll know it's no sure ticket to riches. You need to board a train that can take you higher, and that either means something you do yourself or tagging along with someone else. Both are uncertain roads, so my best advice is to research and weigh your decisions carefully. You might come back and ask HN a 'Should I invest money in this?' question.

I'm pretty smart, but you still need a confluence of certain things at a certain time, which was clearly the case with the app store about 8 months ago, and which I took advantage of.

One can never know if everything will fall perfectly in place the next time.

Something I'd actually seriously consider in your place is YC companies. They get around 20K which is just enough to create a prototype/beta to solicit a larger round. This is not very much and I imagine many don't raise money right away after their Demo Day. Having another 15-20K could be highly desired in these earliest days. YC has already placed their bets that these companies will become great, and I think their portfolio could have a 40% or better success rate (provided timely variables fit together). If you could add your money and app expertise to make a YC (or another) company stronger, that might be the best risk to reward ratio you can have.

I'd be ashamed to approach a YC company with my 24k. Like - it's not THAT much money!

You might be surprised at the responses you'd get. As you probably know web startups are cheaper than ever to build; that's why the YC model works so well. It's not in a startup's interest to raise huge amounts and give up lots of equity early on; it's far better to give up less than 10% (YC typically gets 6-7%). If you saw a company that you could relate to, and which you understood the dynamics of, and furthermore might also be able to contribute your support to then that can be worth quite a lot. The money is just part of what you can bring to the table. You've already built a successful tech app so you obviously have some tech knowledge, which is likely valuable. It certainly doesn't hurt to ask; the YC companies are the same types likely to be on HN, so approach it as more of a community/team aspect than a rigid VC offer. An early YC company might give up another 4-5% for what you could offer, and even that small amount might be worth millions in the not-too-distant future - meeting your criteria.

I do NOT want to invest in the stock market, or invest in anything long term like bonds or property. I want to somehow use the money to make more money quickly (within a 2 year time span).

If you’re looking for investment tips, I recommend the book A Random Walk Down Wall Street.

If you’re looking at the broader question “what should I do with all this free cash flow”, hiring someone else (as many others have suggested) isn’t a bad idea, as long as you think that the time freed up by delegating work to someone else will free you up to work on your next money-making project.

No one has a guaranteed way to make more money quickly...but here's some ideas.

Invest in startups - You might see amazing returns in ~2-5 years, but the risk is very high.

High risk hedgefunds - All equity/bond/commodity investment doesn't have to be slow. It can be risky and full of high returns/loses.

My favorite idea... Expand what you're doing: Use your proven track record and revenues to bank roll your own app store based startup/shop. Hire some people, branch out a bit and look into the android platform. You can avoid the need to take money from outside investors, and multiply your money that way.

The original poster probably doesn't meet the requirements for investing in hedge funds <http://www.fool.com/investing/mutual-funds/2006/02/28/are-yo...; and they don't take $24k investments anyway.

Investing in startups is a bad idea unless he's accredited. http://en.wikipedia.org/wiki/Accredited_investor

Expand, grow, conquer.

- Hire a few contractors to grow your stable of apps. You seem to know what works. Expand on what you're doing so you can do more of the same.

- Build your brand, that way you can use the market you've built to transfer interest from one app to other apps, (as you've been doing on line with your excellent blog posts).

- Figure out a way to diversify your revenue stream. You're already concerned about the app store closing or changing. Hire someone to port the apps to Android. I think that's a long term play, but if Android takes off, I think there's a large upside potential.

I'm starting Android this month, everything is in place. I'll post comparison posts on my blog after I test it out for a couple of weeks. I personally don't think Android will work, but I'm generally a pessimist.

What's the app? I'll buy it.

Find something that is undervalued significantly, dress it up with great tech/service/usability, and dominate that area. Odds are it won't be anything in the mainstream tech circles (ie- realtime web).

Just travel, with a small laptop (for support). You'll be able to live for over a year on that money in places like New Zealand, China, India, etc etc. Or rent/buy a small RV and see rural America!

Why rural america? I've driven through my fair share of it and lived in it for a long time, and based on this heuristic I've got to say that you will mostly just be seeing large expanses of farm fields.

With the kind of money he has: Costa Rica, South of France, Tahiti, [insert sunny place]. Mojito Island

Berlin is also cheap and interesting.

I travel a lot either ways, it's a great tip, but is not that expensive that I could blow the money on this.

What you're looking for is a get rich quick scheme, but you're not going to find one here (not a legit one, anyway).

Here's an idea: have your cousin in the Illinois state legislature throw you some lucrative contracts. That's the kind of get rich quick scheme that works. Don't have a cousin in the Illinois state legislature? Then you'll have to do something that requires more time investment if you want both a reasonable chance of success and a high, rapid ROI.

It seems to me what he's looking for is more like a "get-rich-investment". He has time and money to invest in something, and wants to use them to maximum advantage. No need to belittle the post, it's quite valid.

You have the method by which you can generate lots of money in a short period of time; you just proved that to us with that $24k. But you say your problem is the time and effort expended to create your apps, so I'd suggest you take a portion of your money to hire others, create more apps, and saturate the App Store. What's it to you if the App Store won't last forever? You want something quick, so exploit it while it's there.

You've probably got enough money and enough of an analytical mindset to explore the cost-per-lead affiliate marketing space, figure out what works through test buys (like poker, you've got to play a lot before you get good at it), and then have enough cash left over to float your operation while spending at a decent scale.

Downside - this can be an ethically-challenged business. But so are most 'make money fast' schemes.

You could promote and seed a couple of stackexchange sites. I really have no clue what the revenue looks like but it seems like a dead simple idea.

Great that you're making money with your business. Great that you can tell it's far form from guaranteed.

Just about any other business you'd name is also risky. (and if folks in HN know about something, you know you'll have competition). So no matter what else you do, keep a cushion. There's story everyday about formerly successful entrepreneurs who lived beyond their means and wound-up broke. Don't be them.

Buy a house (or a couple houses). Rent some of them, live on the one you like the most. Let the rent pays for the mortgage.

Start thinking about having a family. Save money for your kids education. Save money for your parents. Save money for yourself for the old age (retirement plans [whatever the shape and form is], hospital bills, traveling).

Why are you opposed to stocks/bonds? Not implying the trend will continue, but there are commodities and diversified foreign stock market ETFs that returned 50-100%+ last year with greater liquidity and less risk than nearly all startups.

Also, there are bond ETFs/funds that are very liquid. I am a big fan of the JNK ETF (~11% interest).

1. If you don't already have one, set up a gold-backed IRA and contribute the max.

2. Then, I'd personally either invest in gold or silver 1 oz bullion. Apmex.com is a great site to buy from. Chances are extremely slim that you'd lose the cash your making, if you convert to gold.

3. Keep some in a money market account, like EmigrantDirect.

Invest in yourself! Working for yourself can make you a lot happier. Since your living costs are low you're in a great position to build a business using that cash.

EDIT: Plus by starting a company you'll immediately promote yourself to CEO. If you ever get a job again in the future, it'll be at a higher level, more pay, etc.

Invest in my company (or another hner) in exchange for convertible debt. Micro invest to help startups pay for concrete little expenses like hosting. It might not give a high return on investment but it would be personally rewarding, and help you evaluate potential future collaborators.

Congrats by the way!

I'd suggest angel investing in startups that compliment your view on where things are headed. It's more fun than the stock market. You have proven knowledge of what's selling now, and understand software.

The turn around is probably longer than 2 years though.

Can you do the same thing with the Android store?

The ecosystem is pretty damn stable when you have a relatively up-market app. We've had stable growth with one application for the past six months, and crazy little variance in our category rank. Maybe develop a larger application, one that you can market for the long-term?

I don't know what to do with the money, how to use this very large monthly income to actually make myself rich

What would you do if you had already made yourself rich? What would you spend your time on?

Why not start doing that right now? Why do you need to "make yourself rich" before you can do it?

I'd look for ways to make myself even richer. It's a game without an end, and it's fun to play.

The end is when you die :). Money doesn't travel over that well.

But as long as you're having fun finding ways to make more money, there's really not that much wrong with playing the money game. Just don't care too much about money :).

Stash half and experiment with the other. No harm in putting some away in a cushion account.

There are no 100% safe investments. But if you want to take the time to educate yourself on one of them, you can do well. Real estate is my preference over stocks.

But if not, an ING direct savings account is a good start.

And talk to rich people, to see what they are doing.

Thought Experiment: Give it to your 18 year old self...what would they do with the money?

Probably buy video games and make an arcade. That was the business I was into at the time, never could afford the equipment though.

The $ should be paid to your business, not you. Then pay yourself very little as a wage. Roll the rest back into the business (i.e. pay yourself to create apps/software that you think would be cool to build and sell). Repeat.

While microloans are certainly an admirable use of money; I don't think that really helps Max with his request at all. Kiva is something you do to be charitable, not something you do to make money.

If you get a decent return on your microloans, they can be a good way to make money (and give some capital to people who need it).

But I agree: I doubt Max has as much of an advantage in evaluating promising targets for microloans than he has building software.

The feel that I've gotten is that nobody is really making any money with Kiva. Most people I've read have gotten roughly a 1% return. Have you heard much about people having success with Kiva that exceeds a bare return on principal?

I agree, and, no, I haven't heard of people making money with Kiva, but that's (at least partly) because I haven't really heard of Kiva at all. My comment was meant to reference the success of e.g. Grameen bank which seems to get decent returns on its microloan business, but also applies a lot of local knowledge.

I'd say, invest in yourself. If you're short of creative ideas on what to do with your time and finances, I think you might find the book "the 4 hour work week" interesting.

Property can be a short-term investment too. Buy something that needs work, do it up, sell it on. It's fun, creative and rewarding too, although not without risk either.

They require a lot of time I would think.

Convert your apps into chinese. Even tiny fraction of possible market like that is huge. Conversion should be more or less trivial, translation effort is cheap :)

Tried, does not work. Chinese market in the app store is small.

What are the Chinese using? Maybe Android or S60 works better for them?

Bank it and don't sweat it until you've got $250K lying around. Starting an IRA with part of it would be good ... but rewarding yourself is also good.

What is the software you used for the graph? Thx.


1. Make More Apps 2. Diversify into Android 3. Stick it in the bank until something great comes along.

Cash is very useful. Do not downplay that.

1. Taxes 2. Retirement savings.

Max out your IRA, Roth, etc to take advantage of your (I'm assuming) youth and the magic of compound returns.

Just turned 29. Want to start retirement stuff at 30.

You should have started retirement stuff the instant you took your first job. The sooner you start, the more money you'll have when you start taking it out.

Buy AAPL, they made you some money already - they will make you more with "iSlate" soon enough. </semi-serious>

iSlate is an opportunity I am watching for. Let's see what Steve tells us. I'm appropriately positioned, seeing as I have all this know how.

iSlate is already priced in to AAPL

Donate 0.01 of your money to Wikileaks, like I did. Your 0.01 will make more difference than mine did.

Find a co-founder (or not) and invest in an app in a more stable ecosystem with longer-term potential.

you can do what Jacques does, he also has a "passive" income from one of his sites, so he makes a few small time investments here and there.

You really don't need a lot of money to invest. Just look at the HN model. As an angel all you need is 25K to get into most early rounds.

That's pretty risky - you'd need to put 25K into one company to make it worthwhile for the company. Angel investing is like VC on crack; you have to spread your investments around because the failure rate is likely going to be well over 50%. The goal is to make the 1 or 2 in 10 that succeed pay off well enough to obviate the cost of the failures.

Angel investing without connections probably won't work, anyway. Most people are looking for more than money.

Invest in companies.

That's pretty risky. If you have a few million dollars that you want to invest into a dozen companies, you're diversified enough that if you make good decisions, it should pay off.

But at an angel level he probably only has enough to invest in 1-3, even fairly small rounds. So it's not too unlikely that all 3 of those companies fail and he loses it all.

High-risk bets, even those with high expected values, are bad if you can't afford to make the same bet enough times.

BTW the dollar is going to tank in the next couple of years. The stupidest thing you can do is buy dollar-based securities. If you MUST invest, buy GOLD.

No joke.

What apps are you flipping?

Invest in yourself.

You've already proven that you are capable of doing great things. Work to increase your capabilities.

To generate wealth, in my opinion it's best to do things that are aligned with what you are interested in. Since you have demonstrated ability with business and technology, and some capital, start with that.

One way to generate wealth is to start a company, then sell it. There are many skills necessary, but the essential one you already have - being able to just plunge in and do it.

I'd say, dive in and see if you can learn to build a small company by bootstrapping it - without taking investment money or going into debt... take it slow and incremental, not going into debt or taking investment unless you think you have a winning team and product. Usually at that point you don't really need investment, but can use it to expand a lot.

These days, software development done by yourself or a few friends and servers in the cloud are so cheap that you can build whole software or software-as-a-service companies with your existing cash flow. Learn the technical and business skills you need. Plan experiments that help you learn - that won't kill you if you fail. You can learn much more from failure than success, so make mistakes as fast as you can.

Oh yeah, and find a good accountant and make sure you pay your taxes.

Here's some resources:

Cheat sheet on how to get people to change - and buy your products. The best summary I've read:


. . . .

My bible on how to learn customer problems and turn them into money. Also has a great annotated bibliography of other good books to read, and a methodology for becoming a self-taught entrepreneur. The author founded 5 well-known tech companies that did IPOs, generating a great deal of wealth, and now teaches at Stanford business school. I can't say enough good things about this book:

The Four Steps to the Epiphany - Steve Blank http://www.amazon.com/Four-Steps-Epiphany-Steven-Blank/dp/09...

. . . .

The inside story on nitty-gritty details of how to start a start up, do the legal work necessary to create the machinery for wealth generation. Written from the perspective of helping tech entrepreneurs protect themselves. If I would have had this book when I was starting out, I'd have held on to much more of my wealth:

High Tech Start Up - John L. Nesheim http://www.amazon.com/High-Tech-Start-Revised-Updated/dp/068...

. . . .

Last but not least, a very important short text on how money works. Written by the founder of MasterCard. Extremely helpful in thinking about money, how to work with it and think about it, what it's good for, not good for, and its capabilities and place in ones' life:


Bonus text - the classic manual on leadership - really helpful instructions on gracefully working with others. How to lead effectively and with a minimum of muss and fuss. This is my favorite translation.

Tao Te Ching - Lao Tzu, translated by Stephen Mitchell http://www.amazon.com/Tao-Te-Ching-Stephen-Mitchell/dp/00608...

- a serial entrepreneur

Pension fund.


Make sure you pay your taxes dude

1) I'd set aside enough money to live for a year in something that's boring, low-return and dead safe. And I wouldn't touch it. This will give you enormous flexibility when deciding what to do with your life and career.

2) I'd talk to financial professionals to figure out how to structure things for maximum gain (e.g. what can you legally write off? can you create retirement programs for yourself? etc.)

3) I'd take classes in my areas of weakness, so I'm better prepared for the Next Big Thing.

I think what you are looking for is to incubate startups

From what he said this is his first real financial success, which means that he does not qualify as an 'accredited investor'. He needs to continue to make that kind of money for 2 years before he falls under more investment friendly SEC regulations. Until then he would be placing a large burden on a startup by trying to invest in it with additional legal work, filings and fees.

Really? With only 24k a month, and no real track record? YC works because you get Paul Graham and co, plus 5k a person... what's he going to get?

My thought too. Help others do what you've done and take some equity.

Or your could simply re-invest in yourself. Could you scale what you're doing with more resources?

Well done! play it safe though: a nice property and an equity tracker fund.

Jesus I wish I was in your shoes.

invest in building products

Give it all to me. I will make good use of it and give you back some extra bucks in a couple of years.

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