In the previous article, I introduced you to the art of creating Golden slaves. In this article, we expound on that and introduce you to two very critical skills that you must master to win in the money game.
Contrary to what our current generation has been made to believe, creating sustainable wealth is not a 100-meter dash, but a marathon that requires you to master the art of endurance and resilience. But the good news is that it is simple, doable, and can be mastered by anyone as it only requires your basic natural skills and instinct endowed to everyone by God/nature.
The cardinal rule when it comes to investments is that put your money in an investment if and only if it creates value and fits within your investment objectives and goals. Never ever buy an investment out of emotions or pity. This is the one place you are allowed to be extremely selfish and to think first and far most how such an investment adds to your value creation. Let me explain this with some basic questions:
- How many times have you bought an asset –say land/plot, shares, or put money in a saving scheme simply because you heard people (maybe from family, colleagues, or chama) say it is a good investment?
- Have you ever bought something from a friend, relative, or neighbor simply because you felt they had a need and felt pity for them?
- Have you ever sunk money in a venture simply because you saw an advert on the Radio or TV from your favorite media or other personality?
- Have you ever bought things simply because everybody else around you was buying and you didn’t want to be left out?
These and many other questions have ruined many people’s financial dreams and left others stuck with what is typically a dead investment. The problem with most people who end up only living an average life or expire paupers is not because they lack the skills to make money or because they have never made money.
Indeed, many of us handle a lot of cash every single year, but very few retain sufficient cash of that which passes through their hands. That alone sets apart the 1% of those who control over 50% of the wealth around the world. Now let me expound on (a) The golden slaves (b) understanding the fundamentals, and (c) isolating the value from emotions and marketing gimmicks.
a). The Golden slaves –the MUST 10% savings (from the previous article) you set aside is meant to connect you to the wonderful magic of gold attracting more gold. It is supposed to transition you from working for money to money working for you. In my considered opinion, these savings must only be invested in ventures that preserve the principal for whatever cost. The earnings may be relatively smaller, but over time and with the power of compounding, enslaving her children and grandchildren the returns would grow exponentially. This is mainly what we call creating safe passive alternative streams of income.
For example, you could start with a savings account (smaller interest…but helps you accumulate cash), once you have said KES.100,000 you can now move it to say Treasury bills/government bonds or find a good money market (that earns higher interest). Investing in government bills/bonds is a straightforward process & need not pay anybody to do that for you.
Sustain this cycle of accumulating your cash and re-investing the maturing investments. As you continue to work for money, what you have been saving is also working for you and thus expanding your earning power (your golden slaves faithfully, without ever complaining or tiring work for you whether you sleep or travel or lose your job).
b). This is a bonus to re-jig your golden slaves in (a) above. Many of us make other savings in SACCOs and chamas and other associations/groupings. If you have noticed, you are already able to meet your normal expenses without what you put in these saving ventures, but still ‘eat’ the interest and the lump sum from the chama/merry-go-round when it is your turn. You can easily turn these into golden slaves & start enjoying the power of compounding!
c). My second point is to understand the fundamentals that drive value –for example, you have seen pieces of land being sold all over in the name of they are next to these or that highway or by-pass or SGR or a prominent personality is the neighbor? These things are simply marketing gimmicks that have nothing to do with the value of that land. It is next to the SGR or tarmacs so what? What you MUST always remember is that these people are in business and many are brokers hungry for commission.
It is your responsibility & duty to identify the value before you put your money into it. Always remember the cardinal rule – you have every right to be selfish when it comes to investment. For example, if a piece of land is next to a town/shopping center, is it growing & at what speed? If you are told it is next to the airport, are there any planes landing there to bring customers & business? What can you invest in there and when will it make you real money and by when? If it doesn’t fit within your targets and plans, then just leave it and move on to a better investment that aligns with your plan and goals.
d). My third point is to learn to isolate/see the value from the noise –for example, why should you pay sh.200,000 for a dairy cow instead of buying 5 Borana cows? What is the value here? The value is in the milk you expect in the future and the resale/disposal value when the time comes to sell it.
In whatever potential investment you make –always ask yourself first, how will my money come back, from where, and when will it come back? If you cannot answer that question clearly, then you probably do not understand that particular investment and must never put your money into it. Never buy because you heard, or colleagues and friends are buying, only buy that which makes sense to you.
e). Never buy a value you cannot see, touch, or feel as a rule of thumb –this is a bonus to (d) above. There are current stories of thousands of people trapped with off-plan housing schemes. Recently, people lost millions in pyramid/Ponzi schemes. But the warning signs are always there shouting at you.
I once visited a popular pyramid scheme then in town and could not believe how people of sane mind could take loans or their savings to this scheme. It was a tinny room with a grill door and a watchman who refused to open it and only asked me how much I wanted to ‘put’ there. He could not explain what business is it they are in and how I will get back the 15% interest every month they were promising. I could not be let in to see the man/woman I was to entrust my money with, yet he was telling me, even if it is sh.10 million I have I deposit with them. How ingenious can a con game be?
Finally, let me introduce you to another BIG mystery of money. If you want to grow wealth, find worthy causes to give also (and for heaven’s sake do not misquote me – I mean worthy cause). Never wait to make money to give, whatever you give for a worthy cause, it comes back tenfold. Nobody knows why, but it is real and it works. Ever noted that Africa gives nothing while we receive billions of dollars from other countries? Yet they continue to grow rich while we continue to wallow in poverty.
For the avoidance of doubt, I did not mean you subscribe to the ‘planting of seeds’ gospel or buying various items sold by some preachers in the name of receiving your anointing. For heaven’s sake, exercise your God-given wisdom as you seek the wonderful blessings that come from giving.
Excellent especially the power of compounding