Getting rich and making more money
Getting rich and making more money are two different matters.
However, they are closely linked.
A person has to make more money before he can get rich.
To put it simply, getting rich starts from making more money. After that, the second step is to save more money.
The third step is to invest. This is the step that determines how rich you can be.
Those who dare to invest all their money, take on debt, and risk being homeless has a chance to get very rich.
They may really become homeless and deep in debt, but they do not give up. They will start all over again to make more money, save more money, and invest.
For most of us who dare not risk all, we can only get richer, but not become very rich.
Investing for capital gain is very risky
Investing for capital gain is a very risky venture.
There is no guarantee that prices of anything will keep on going up.
For the past decade, gold and silver outperform many other investments.
However, there is no guarantee that the price of gold and silver will keep increasing in the near future.
It does not even matter what you are investing in, as long as your mentality is to invest for capital gain, you will run a very high risk.
That is why asset allocation is so important.
If you like the thrill of selling for profits, you must have some money in income-producing assets.
That means if you want to invest in wine, and sell them for 50% profit a few years later, you must have assets that give you income every year.
Investing for cash flow
When I have to decide between buying gold bar and investing in the stock market, I tend to favor stock market.
I do not like to buy and sell frequently. It is too stressful this way.
Even if you manage to make a capital gain of 20%, you still have to buy another stock so that the money does not sit in bank, and earn miserable interest rate.
In the next trade, you may lose.
I like to invest for cash flow.
That means I look at the dividend yield, and the annual report to see if the companies can afford to pay dividends every year.
There are many companies with stable business, and pay dividends at least once a year. It is great to see money in the bank that comes from investment.
Investing for cash flow is boring, but less stressful.
Invest in an apartment with view for better rental income
When tenants rent an apartment, they do not want to look out of their bedrooms to see multi-stories car park or traffic light.
They want to see great view.
If you can afford it, you should choose the priciest apartment in the block.
These pricey apartments are located high up.
When the residents open the window, they look at the unblocked scenery of the whole city.
They can see miles, and miles away, and the cars and pedestrians look like little ants crawling.
There is a good feeling from such view.
That is why they are willing to fork out top dollar for the rental apartment.
If you are investing in an apartment for rental income, and capital grow, make sure you take the apartment with great view.
Investing in silver coins
I read an advertisement in the newspaper today about investing in silver coins.
This advertisement is encouraging people to buy 2 silver coins every month.
That means you pay the current rate for 2 silver coins on a monthly basis.
While this is the way to save money, the problem is that the price of silver is very volatile.
I rather buy a tube of 10 silver coins when I have the money than to entrust the money to a company for buying the silver coins.
To be frank, I rather buy silver bars than silver coins.
The premium over spot is always lower for silver bars than silver coins.
That means you are paying less for one ounce of pure silver bar than for one ounce of silver coin.
I have to say that the investment opportunity makes sense. It encourages saving, and buying on a monthly basis means you do not buy all the silver coins when silver price reaches a new high.
Investment risk is due to lack of knowledge and experience
Investment risk is due to the lack of knowledge and experience.
Stock market and real estate are traditionally the best investments to get rich.
There are people who become millionaires and billionaires from the stock market and real estate.
This is because they have adequate knowledge and experience.
They gain knowledge by learning, and they gain experience after a few months or a few years of investment.
There are many more who manage to lose money even in the bull market. These are the ones who refuse to learn, and yet are greedy for more and more.
They will learn from their bitter experience if they do not give up.
Investment risk is not about the investment type. It is about your behavior and attitude towards the investment class.
(all images credit to Pixabay)