I was reading an interesting story today about how Saudi Arabia, through its Savvy Games Group, recently made massive investments in large gaming companies like EA, spending billions to expand its portfolio into the entertainment industry. However, with the ongoing conflicts in the region, including tensions between the US and Iran, their oil revenue has dropped significantly. This has left them with far less money than anticipated to fund these video game ventures.
There have even been talks of merging EA with their other gaming divisions. It’s fascinating because you’d assume they’d have a constant stream of income. It’s almost like living off investment returns, say a hundred thousand dollars a month or more. You’d think you could comfortably live on that while using it to invest in other businesses. But imagine if that suddenly dropped to just a thousand dollars a month. That’s a massive difference.
It’s a strong reminder that it’s smart to invest and diversify while you actually have the money to spend, because you never know when one income source could dry up. In this case, relying on a volatile revenue stream to fund ventures that were already in debt shows just how risky that approach can be.
Personally, when it comes to investing or big purchases, I hate taking on debt if I can’t buy something outright. Whether it’s a company or a house, I’d be much less likely to move forward for exactly these reasons. A lot of people successfully mortgage properties and use rental income to pay them off, but I find that approach really risky. I’d rather find a way to buy the property outright first, then rent it out if I want to generate income. Or, for a home, a safer route might be owning it fully and renting out the basement.
It’s definitely something to think about when funding projects with an income source that could disappear overnight.