Is a 30,000 yen profit big or small, published as a column on Toyo Keizai ONLINE

Good morning, this is Matsushita.

Yesterday was the Profit Investment School

Trading Techniques Mastery Course, and the

Trading Research Meeting day.

As US and Japanese stock prices steadily climbed higher, we pondered what might happen next and

taught the essence of investing.

You might think, "30,000 yen profit"

is it big or small?

You might think, "30,000 yen is a small profit."

Most people probably think that,

"30,000 yen is a small profit."

For someone aiming for 100 million yen in profit or who wants 10 million yen yearly,

this profit might be of no use at all.

It may not contribute anything to those who want 10,000,000 yen a year.

For them, it might be meaningless.

However, just by the amount of "30,000 yen" alone,

we cannot discuss the magnitude of profit.

Here, there is no mention of the principal—how much capital was used to generate this profit.

Without that, you cannot determine the size of the profit.

In such a case, you cannot tell whether the profit is large or small.

If this 30,000 yen profit were produced by a principal of 100,000 yen,

what would happen?

The return on investment would be 30%.

That is a very large profit.

Nowadays, there is no financial product with a 30% annual yield,

not even close.

You are unlikely to encounter it even once in a lifetime.

Furthermore, if this profit were earned in three months,

how would that be?

Theoretically, it would be an annual yield of 120%.

This is an explosively high profit.

Yet, at the very start of this article,

most people thought,

"30,000 yen profit is small."

That misreads the sense.

You have not evaluated investment returns properly.

In the example above, earning 30,000 yen in profit in three months with a 100,000 yen principal

is a miraculous, explosive profit.

If you fail to recognize this power and think 30,000 yen is a small profit,

that investor will eventually fail in investing and

lose most of their funds.

Investment profit is determined by how much percent you earn on the principal

and over what period of time.

Even if that profit is 30,000 yen or 10,000 yen, it can be a destructive profit.

Please understand that this is investing.

And finally, by earning large profits from a large principal,

let us become investors who think that way.