The rich and wealthy buy assets and take risks while the poor buy liabilities and are risk-averse. If you have started reading this just continue because it was meant for you. Everything happens for a reason and probably God wants to help you make a wise investment decision by reading this. We all have a burning desire to grow our investments and live our dream lives but lack information and that crucial push. For every successful moment, there is somebody who held your hand or gave you that crucial push.
Today I will share with you some insights on how to identify good investment opportunities as one way to grow your financial intelligence. We learned from Robert Kiyosaki the author of rich dad poor dad that money is like blood. It is supposed to be in constant circulation. If you hold it, it transforms into a clot and that can easily destroy you. Similarly, you can die financially if money is kept idle for long. So, therefore, most people struggle with financial growth because they try to save the little they have away from risk. The value of money saved in a bank is wiped out by inflation and bank charges such that if you kept 600 in a bank to buy a bag of cement and after one year a bag of cement is 800 it means you cannot afford a bag of cement one year down the line. That is the truth and reality when it comes to making investment decisions.
So what are you supposed to do? You may ask. The whole idea is to keep money in circulation by investing. Investments grow your worth and also put cash in your pocket every month if you do it right. The reason many people do not invest is that they fear the risk of losing money and others give the excuse of not having capital. Of course, we are all risk-averse but we take calculated risks. Remember in business those who don’t take risks lose to the risk-takers.
When we bought our first land Genesis 1 a plot was going for KES 150,000. One year down the line the price for a similar plot was going for Ksh 450,000. That one year alone your wealth grew by a hopping KES 300,000. Compare this investment decision with a risk-averse person who kept his Ksh 150,000 in a bank account for one year. If this is repeated every year the difference is enormous. Again when in town just look around you, what you see? office buildings, hotels, banks, churches, residential houses, shops, etc. All those structures are owned by individuals who must get a paycheque every month otherwise somebody will have to be kicked out. That’s real estate for you and for that matter an investment of choice if you desire wealth and good living.
Now it must look pretty obvious why the rich and wealthy are fascinated with real estate. Well, I will tell you something else the wealthy are fascinated with. The wealthy use borrowed money. The average person thinks that debt is a bad thing. For the wealthy smart investors, debt is a good thing.
Look at it this way. If you borrowed a million shillings and bought a car, 5 years down the line the car will be worth half of that money if not less. But if you borrowed just Ksh 150,000 and bought land at Genesis 1 the land will be worth more than 2 million in less than five years’ time. At least that has been my real experience. An investment puts money in your pocket and if it does the other way round then it becomes a liability. In other words, the first borrower bought a liability while the second borrower bought an asset. money should work for you to make you richer and wealthier. Think good debt and you are off the ground.
If you do it right on investments, you end up wealthier and your income will grow too irrespective of how much money you borrow. The rich and the wealthy avoid risks by buying assets that eventually put money in their pockets while the poor save money or buy liabilities. The smart wealthy investors will also further protect their investments against other normal risks by taking an insurance cover.
I leave you with a business joke
Investment joke
An Investment Banker Was Getting Married.
During a wedding, The Wife Vomits.
Husband: “What Happened?”
Wife: “Capital Gains Arising Out Of Previous Investment.”
Husband: “U cheated me..”
Wife: “U should know, mutual fund investments are subject to market risks!”
David Mbogo Namu
Chairman- Mkono Poa housing cooperative society limited.