Wealth Creation: Multiplication vs Fractionalization

As you most likely know, we began this discussion by talking about the 100-fold return. That is not a promise in Scripture but is nevertheless a topic of interest because it speaks to wealth creation and the concept of multiplication vs the fractionalization of resources. Fractionalization can give you increase, but multiplication creates wealth.

If you want to be technical, anyone can get rich on 5% annual interest if you live long enough but It would take about 95 years to grow $10,000 to $1 million. Besides, we most likely won’t be using the dollar 95 years from now, because all unsecured paper currency eventually returns to its intrinsic value and we are fast approaching that point now.

Wealth Creation Factor # 1: Profitability

The 100-fold return is easy and anyone can do it – if you have enough time. For example if you had $1000 to invest, do you think you could turn that into $1,010 in a 30 day period? I’m talking about a measly $10 profit in 30 days. That is ridiculously easy to accomplish. Just buy a gumball machine or a car at auction or a tax lien or any of a hundred things and you can get a 1% return in a month.

If you took your $10 profit and added it to the principal every month for 39 years, that $1,000 would turn into more than $100,000 in 39 years. That is a 100-fold return. If you began that when you were twenty and you were now fifty-nine, you would have $100,000 extra dollars in your account, which is way more than most Americans of any age have saved up. That is very real wealth creation, albeit kinda slow.

I’m just trying to get you thinking here so stay with me… We read in Scripture that Isaac got his 100-fold return the same year. It was actually in one growing season. That’s more like it! However as I previously mentioned, getting a 20 to 50-fold return on wheat is fairly normal today. If that yield was normal in Isaac’s day, then getting the 100-fold return was in fact, double the normal yield. This is solid, replicatable wealth creation.

I’ve even wondered if that was the 6^th year, the one before the land was to rest for a year, and in which they would receive double the harvest (the double blessing). It doesn’t say and this occurred before the law, so it is only speculation, but regardless, it was done in a time of famine, so God’s blessing is what secured the outcome.

Multiplication vs Fractionalization

One of the things the world has conditioned many of us to, is fractional increase vs multiplication. God said, “Be fruitful and MULTIPLY” not “be fruitful and fractionally increase”. Can you imagine Isaac planting a bushel of wheat and hoping for a 10% increase in a year so the next year, he could plant 1.1 bushels of wheat and maybe if he lived long enough he could actually eat some of his wheat!

When you consider what Revenue Generating Mechanism you are going to build, one of the first factors you should consider is profitability. How profitable is the transaction, the investment, the effort, going to be? May I suggest you consider using a multiple as a goal instead of a fraction? But before you decide on what you think good profitability is, I suggest you consider all seven of the factors that affect every Revenue Generating Mechanism.

Profitability as a stand alone measure is a trap and many folks have fallen for that one. Without knowing the second factor, profitability means nothing. Check back for our next post to learn about it, or sign up here to get the notification in your email.