Investing Is Boring

To quote one of the best investors in the world today, George Soros, he says, “Investing is boring, if you’re having fun doing it, you’re probably losing money.” What does he mean? He’s referring to the many hours of research, analysis, and digging for good info required to invest successfully. Anyone can read a 5 minute article on Bloomberg or CNN Money, but these kind of resources rarely yield the kind of information you’ll need to be successful as an investor. I won’t get into why, but suffice to say that research is hard, and good research is harder, nobody gives it away for free, and if it’s that good, they don’t give it out at all, they use it to get rich.

Think of quality research as inside information; you have it, and if you let it out, you’ll lose your advantage. This is why it’s imperative you do your own research, or at least find a top notch service, which in all likelihood will cost you money. You don’t work for free, and neither do they. Knowledge is power, we live in the information age. Understand this, and you’ll understand why you won’t get the gold nuggets by spending 5 minutes on Bloomberg or CNN.

What’s more, practically nobody is willing to do the hard work of researching for good, solid info. The majority of investors reflect our society, they want it now, with no effort, and preferably no cost. It’s this attitude which makes them easy prey for the pros in the market, who put out these articles and all too often, have trades put on to profit from the lazy investors who will invest due to these articles.

This attitude also explains why so many traders lost so much money on oil’s fall. They didn’t understand the forces behind the fall, and nor were they educated on how the energy market had developed extreme excesses of production and supply over the last few years. The most in history in fact. Had they done their homework, they would’ve known that the EIA was warning about oversupply since 2013, and every US refinery was at or near capacity for supply. Instead, investors mistakenly believed that because oil had been at $100 so long, it had to go back there soon, market forces would drive it there. But market forces had changed dramatically, and there were many powerful changes occurring to bring oil down at the fastest rate in history.

We now know all the facts, and it’s all too clear why oil fell now. In fact, now that the facts are out, many mainstream sources are suggesting we could even see $20 oil. None of this matters though, the damage is done and the move has occurred. Whether we go to $20 or not is not as important as falling from $110 to $45. Nobody is making money in oil now, except the Saudis and a few Middle Eastern nations. They have the lowest cost per barrel of any producer in the world, which is why they don’t mind letting these prices remain, they know they’ll be the last man standing, and can then jack prices up as high as they want. But they can’t do that until the competition is removed.

See the game being played? You think traders would’ve bet on oil going down had they known this? No way, they would’ve made money shorting oil instead, like some did. So, the name of the game is information, the better yours is, the more money you’ll make. Don’t scrimp on it, but don’t assume that anyone who charges you big money will provide great info either. Choosing an information source is the most important decision you will make for your investments. At Wealth Management Vancouver, our edge is information. Our clients know the value of it, and because they profit from it, the cost is entirely justified.


The Art and Science of Business Investing

Investing in shares of operating companies, those firms that create and/or market products or services, can be a ingenious avenue to leverage off of all kinds of other investments. You can also buy shares in an investment company, which is a firm that invests its money in the shares and bonds. The original funds are raised issuing shares to the public. Profit to the investment company comes only from the interest, dividends, and capital gains on its investments.

The close-end company is similar to an operating company. It has a number of authorized shares that it can issue. Additional sources of funds come from retained earnings, bond issues, or by issuing more shares to the public. The shares of a listed closed-end investment company are traded just as are shares of operating companies: on a stock exchange.

Open-end companies, more commonly referred to as mutual funds, can buy and sell their shares directly with you or through brokers. There is no trading market. There are load funds, that is, those that charge a selling fee and no loads. The prices of their shares depend on the market value of the securities held by the fund. For example, if the value of the fund’s securities is $15 million and there are three million outstanding shares, then the price you pay is $5 as share. Insurance companies offer variable annuities that have characteristics similar to mutual funds.

Investment companies range from the popular money-market mutual funds to specialized option funds. An investment company affords you two obvious advantages. No special time or skill is required to manage your investments. A professional management team handles almost everything. Equally important, the investment company offers you diversification.

While an individual with a small amount of money will not be able to invest in a variety of areas, the company can and will do this. The management group of an investment company operates to achieve broad objectives. Some will stress growth; others, income. Therefore, it is easy for you to match your investment objectives with those of the investment company.

Taking a Ownership Position in a Small Business

Perhaps you have an ownership position in a small business in several ways. (1) The business may be owned outright as a sole proprietorship. (2) Two or more people may each own a portion as partners. (3) The business may be incorporated, with the stock held by one or more people.

In case of a general partnership or sole proprietorship, be forewarned that should the business go bankrupt, the owners and general partners are personally liable for the unpaid debts of the business. For this reason, incorporation may be advisable. On the other hand, there are legal fees, reporting requirements, and tax differences for an incorporated business. Moreover, the desirability of incorporation will vary according to the type of company and the goals and risks the investors wish to assume.

An “S” corporation may provide a solution in that it has the limited liability advantage of a regular corporation, while its income (or loss) is passed through to its shareholders, hence avoiding the corporate-level federal tax. Not all states recognize “S” corporations, and federal tax rules governing them are complex.

If your investment in part or complex ownership of a company obligates you to manage the business, then your expected return (salary and/or share of profit) should reflect this time investment. Because of the numerous obstacles that must be overcome to successfully start and run a business, the risk to your investment is very high and that investment will require high maintenance. Do not consider buying into a business until you have educated yourself thoroughly about the business and the business world.


Firestorms, Real, and Financial

We took a little vacation over the weekend before Black Monday, August 24th, 2015.

Having just finished contemplating and describing the fear and volatility left over from the previous week, I felt predisposed to signs of ‘smoke’ everywhere I looked.

Freeway traffic patterns, police action, geological activity, tremors, vibrations…

Returning to our hotel from dinner we noticed a strange phenomenon.

A line of fire support vehicles parked along side of our hotel had developed in the hour or so that we were gone.

Trucks with young, worn out, young men returning from north California and beyond. Firefighters returning from the front lines.

And they were all from New Mexico, making it feel even more surreal.

None are historically large.

And it’s hard to say for certain if these fires are directly related to the epic drought that the West is currently experiencing.

Some say it’s early in the year for this many fires. Others say it’s normal.

I couldn’t help wonder if it all wasn’t some kind of sinister distortion emanating like the Keynesian ‘broken window fallacy’ resurrected.

The parable of the broken window was introduced by Frédéric Bastiat in his 1850 essay Ce qu’on voit et ce qu’on ne voit pas (That Which Is Seen and That Which Is Not Seen) to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society. The parable, also known as the broken window fallacy or glazier’s fallacy, seeks to show how opportunity costs, as well as the law of unintended consequences, affect economic activity in ways that are “unseen” or ignored.

The problem is that we endure these seasons to begin with. Very much like the booms and busts brought about by artificially induced credit cycles. And the slow, boiling inflation that cooks us like frogs.

Nature has been distorted on so many levels that it is difficult keeping track of it all. Our interventions are largely based on the erroneous belief that we actually know what we are doing. In fact, most of what we eventually learn comes accidentally, in the wake of disasters.

Instead we are in simply reduced to experiencing and adapting to cycles created by extreme intercession.

Repairing symptoms from diseases that we unleash. As we go on, more and more resources are needed to fight the disasters.

Some seasons are normal. But the seasons of today, both fire and economic, are anything but.

In terms of fire, there is the normal forest fuels accumulation.

Nature has evolved to depend on it for restructuring the soil. There are seeds that require the scarring in order to germinate.

Yet civilization has fought this. We build instead. We ignore the dangers, and then invest in protecting the life and property.

This is not limited to forests. Whether it’s 5000 square foot house “(insured)” on the beach in the middle of Hurricane ally or the cottage in the woods. Or building entire communities on a fault line.

The same goes for financial intervention and the trillion dollar band-aids and bailouts.

Financial fuels consist largely of untested or misapplied philosophies that ultimately lead to massive market distortions. The build up of unsustainable public and private debt. The slow destruction of a workforce. The breakdown of the economic engine underlying real, organic economy.

The disenfranchised, the disengaged are left with bread and circuses. Civic, societal participation splinters off into all manner of dark corners.

We can blame the great ‘100-year financialization of everything’. It grew from intervention and from one disaster to the next – to save us from doom. Turning every asset – real or imagined – into ‘securities’ that are collateralized, re-hypothecated, and lost in a world of derivatives that will only be sorted out as they burn in default.

Natural systems move back and forth toward equilibrium. Behavioral systems also eventually succumb to physical laws.

In the era of high speed, fully automated, programmed trading, there is no human market maker. Once the algos are triggered, they all sell into a vacuum. The bottom suddenly drops out. And we experience four thousand tiny flash crashes in a moment like the one we observed on August 24th.

There was something ominous about these firefighters – all brought in from New Mexico – having been camped out in make shift areas the previous night.

They were worn out, yet prepared for one kind of disaster. Unlike 99.9% who are ill-prepared a whole other impending crisis.


Central Planning, Politics, Economics and The Santelligram

Rick Santelli may be one of the last speakers of truth left in the mainstream financial space.

Santelli is a former commodities trade – now a popular CNBC commentator, broadcasting from Chicago.

He is treated like a sad clown brought out for entertainment effect, where you brace for the extreme. In his case, this often manifests as an angry rant.

In a recent broadcast, Santelli presented what is now affectionately known as “The “Santelligram”. It’s Venn diagram illustrating the multigenerational evolution and relationship between money, finance, and politics – reaching back from now to the end to the 19th century.

Rick Santelli Unleashed: It’s Not The Economy, Stupid – “The Central Planners Are In Control”

In other words, it’s a chart illustrating a developing imbalance over time, where ultimately central planning takes over everything.

I’ve added a couple things.

I would argue that ‘government’ was engulfed by central planning long ago.

Little by little – money centers gained access to and influence over the highest levels of political and judicial powers.

Also, central planning ultimately captures Justice. Or rather an injustice rationalized and accepted by the profit motive.

This is why the regulators stand by while the system is pillaged.

It’s why high frequency trading has been allowed to replace the traditional market maker.

These are the advantages given to publicly traded multinational investment banks – or the primary nodal points in a fiat-based financial system that stands at edge of collapse.

As a result of this full-capture, no markets are ‘allowed’ to trade according to fundamentals. In fact, fundamentals are actively scorned, almost to the point of ‘conspiracy theory’.

In this way, true market price is never allowed to manifest.

The silver market is the poster child for this. Silver is tiny market long dominated by power-house fabricators, traded by insider speculators, and mostly ignored by the masses over time.

Politically, all of this capture, leads to much greater hazards.

The slow, steady wealth grab continues while the masses are safely distracted.

Is it so surprising that – not so much as ‘the person’, but the ‘persona’ of a Donald Trump would arrive on the scene at this point in the generational cycle?

It is a sad omen. A festering on the surface that has given way to a fuming ulcer.

For the general mistrust and apathy created by this progression from true capitalism to where we are now, combined with the disenfranchised, leaves a massive vacuum to be filled by whomever shouts the loudest.

Ultimately, central planning has never worked. In retrospect, this scale of intervention always appears like a futile exercise. Like trying to save a fish from drowning by taking it out of the water.

A points that outline this futility over the years.

  • Central banks now own over $22 trillion of financial assets, a figure that exceeds the annual GDP of US & Japan
  • Central banks have cut interest rates 577 times since Lehman, a rate cut once every three 3 trading days
  • Central bank financial repression created $6 trillion of negatively-yielding global government bonds earlier this year
  • 45% of all government bonds in the world currently yield <1% (that’s $17.4 trillion of bond issues outstanding)
  • US corporate high grade bond issuance as a % of GDP has doubled to almost 30% since the introduction of ZIRP
  • US small cap 5-year rolling returns hit 30-year highs (28%) in recent quarters
  • The US equity bull market is now in the 3rd longest ever
  • 83% of global equity markets are currently supported by zero rate policies

What worked in the past was a balanced decentralization, based primarily on the will of people, and not the power of leadership.

Alas, ultimate power is synonymous with unlimited force.

And pretend what we will about the ‘civility of the oblivious’ during these times of bread and circuses.

Domestic spying, the militarization of local police, the erosion of justice from the top down.


How to Invest Safely and Generate Income for Life

So how do you invest safely and what is the investment strategy? It’s called the Permanent Portfolio. Permanent because it applies from cradle to grave, whether you have modest savings or millions of dollars. Portfolio because it’s a mix of very specific asset classes. It has a proven track record; as of April, 2015 it earned over 8% per year compounded over the last 40 years. It can help You generate an income for life. It’s simpler, safer, less volatile and lower cost investing (0.15% per year cost vs. industry average 1.08% per year). It puts more money in Your pocket and less in theirs.

It’s not meant for speculating, but for Your longer term savings and investments like retirement, 401K, IRA, ROTH, etc. It helps You buy low and sell high; opposite to what most people do. It doesn’t require You to do market timing, forecasting or guessing which asset will outperform. It uses an asset allocation that responds to what is happening with the economy; prosperity, recession, inflation or deflation. It allows You to become self-sufficient and not dependent on outsiders to manage Your own money. You won’t hear about it from investment dealers, brokers, financial advisers or insurance agents because there is no money in it for them.

This Permanent Portfolio helps us mitigate risk. The assets used tend to zig and zag with respect to each other and are contrasting. So as a blended mix they improve portfolio stability. Stability also helps mitigate the sequence of returns risk, which is especially important during the spending or retirement phase. Each asset class is exposed to different risks and also hedge against different risks. You have probably heard of asset correlations; they don’t really exist. Stocks don’t go up because bonds go down and stocks don’t go down because bonds go up. The assets in the Permanent Portfolio behave differently depending on what’s going on with the economy. You can do a financial stress test of a financial institution but you can also do one on Your own portfolio. What would happen to Your portfolio if an asset like stocks dropped by 50%? If You held a traditional 60% / 40% stock / bond portfolio, Your total savings would have dropped 30%. If You held the Permanent Portfolio, your impact would only have been 12.5%. No one likes a loss but the Permanent Portfolio helps mitigate that risk.

Fear and greed were Your worst enemies but not anymore. If You were like most people, You were buying high and selling low. But now You will have a much more disciplined approach to follow without Your emotions getting in the way. You’ll be buying low and selling high, systematically. If You were like most people, You were also too busy chasing returns, trying to time or beat the market. You probably didn’t do as well overall as some of the market indices did; this has been described as the “behavior gap” which the Permanent Portfolio will help you close.

The Permanent Portfolio investment strategy is pretty simple. You initially buy four different but very specific asset classes in equal proportions: in general they are stocks, bonds, cash and gold. You then hold these assets until any one asset class drifts to 35% or 15% of the total value of the portfolio; then you rebalance the whole portfolio back to 25% for each asset class. This process takes the emotions out of the equation and systematically guides you to buy low and sell high. You can construct this portfolio at a weighted average cost of only 0.15% per year, which means you keep the majority of the gains not the financial institutions. The specific assets used in this strategy are what makes this work.

Once you have the Permanent Portfolio in place and progress into your spending or retirement phase, you can mathematically guarantee yourself an income for life using my “Income for Life Formula”. You will be able to spend “x” percentage of Your portfolio each year subject to a “y” percentage cap based upon the previous year’s income. Mathematically guaranteed income for life.


Ways to Find a Conservative Investment Strategy

Most local banks are indulging to take over the investment banking business, and some highly under-leveraged companies have gained a lot and showed maximum growth. These companies are now progressively tapping onto a new investment through equity offerings to subsidize growth plans.

Banks and their mode of operation

A majority of banks serves their customers in the most common sector teams such as Telecommunications, Media, Commodities, Healthcare, Real Estate and Fiscal Institutions. Depending on the requirements of the client, the bank tender services, ranging from Acquisitions to Equity and Financing to share sales. Some of the Bankers get references from customers all the way through their Capital Management Division. This division also handles resources of professionals such as Executive Officers and Business Owners.

Major players in the Sector

The capital raising bankers indulge in selling securities with the intention of raising capital for businesses. On the buying-side, there are other Institutional Buyers, Private Equity Funds, and Hedge Funds. These are mostly in the case of initial public share offering, including the community as an important section. There is an involvement of brokers who finance the public shares to alleviate some threat. Another part is played by rating agencies who have an effect on the cost of the securities sold.

Career Prospects at Global Banks

In some regional banks, individuals are hardly ever paid higher than that of Corporate Finance Bankers. Most qualified graduates struggle for a job, particularly at global banks. Some of them follow their Management or Chartered Accountant credentials for an opportunity of an interview. The typical chain of command at a Bank is Accountant – Associate – Manager – Director – Chief Managing Director. Many graduates join the bank and acquire promotion without pursuing any higher studies.

Understanding from the last crisis

Whether it’s a short-term capital investment or long-term capital investment, there are two phenomena to understand. The first one is insignificant, and has less carry out with basic realities. The second one is investment oriented, and linked to the rising of the capital in a new perspective. There are investments that incorporate venture capital and long-standing portfolio investments. The flow of capital should be completely encouraged, and the beginning of economically oriented capital controls is a good initiative. An integral part of the International Financial Planning should be under control of tentative money in recreation of ever higher yields. The capital markets grant yields linked to economic crisis and the aspect of things must be at least defied.


Fixed Income Investments

Fixed income investments certainly don’t offer the same potential for massive returns as you would find in the stock market, however fixed income investments have an important place in every investment portfolio. There is no speculation or gambling here; in fact, these investments are used to reduce your portfolio’s overall degree of risk.

Depending on who issues the investment, the reward may be a guaranteed return of investment paid out at specified intervals, resulting in a steady cash flow. A wide range of bonds, securities, GIC’s and more are usually issued by the government, or a corporation.

Fixed Income Investments

Term deposits and guaranteed investment certificates are liquid investments that offer a pre-determined rate over a set period of time. Although the investor can cash out at any time, they will pay a penalty for cashing out before the maturation date. GIC’s are a great choice for those entering the investment market who are unsure of how to proceed, as they are available in terms as short as 30 days.

Mortgage-backed securities provide a monthly income for investors seeking a safe fixed-rate option. Each month, the investor receives a share of the interest and principal on a pool of several mortgages.

Provincial savings bonds carry a slightly higher risk than Government of Canada bonds, although they still represent one of the safest investment options available. Provincial bonds pay a guaranteed, fixed level of interest and are available for one to thirty year terms. With the higher risk comes a higher yield than that offered by the Government of Canada bond.

T-Bills and Government of Canada bonds are completely risk-free if held until maturity. The government guarantees every cent of the principal and interest, making their bonds the safest investment choice by far. These bonds are available in Canadian or American currencies, although an American currency GOC bond is still considered Canadian content in your portfolio. Terms range from one to thirty years, with a minimum $5000 investment for Canadian currency bonds, or $25 000 for USD bonds. GOC bonds are RRIF, RSP, and TFSA eligible and provide a safe option for investment portfolios.

Fixed income investments are a necessity in a diversified portfolio. Before purchasing, consider your needs and the level of risk you are willing to take. Although most fixed income investments are liquid, you must consider the penalties that will apply if you need to cash out before the maturation date. A knowledgeable broker can help you choose a fixed income investment term and conditions best suited to your financial goals and current investment capital.

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Investment Resources: An Easy Way to Earn and Become Successful

Generally speaking, based on its basic definition as the way people comprehend the word, investment is the process of putting money into a business or an organization to earn money in return. It is one of the most popular methods of increasing your finances in a very easy way. In fact, as many people projects it, investing is always better than saving or depositing your money in the bank as investing can acquire less tax and higher revenue.

The process of investment starts with the different investment resources, especially for people. The money collected is processed to work or move on a specific business to earn. The investments may give a certain position or share in the company where the returns or the revenues are given back to the investors depending on some their investments. That means that if you invested a higher amount, then the returns are higher than others.

What is good in investing is that you don’t have to work to earn. All you have to do is to invest, and wait for the earnings to come. Good examples of investment methods or practices are a stock market and cooperatives.

There are several factors you need to consider when investing. These factors are important to ensure best results on your investment. Check the following factors below.

Company Background

The first important factor is to check the company background where you want to invest your money. The company should have a strong foundation and stable income with a forecast to exist in the next 20 years.

Investment Resources

You have to make sure and be certain that you have the right and accurate investment resources to invest. Do not put all your money on the investment. This consideration will give you security if there are problems that will arise.

Always Observe

The last factor is to be observant. Earnings may be easy with no efforts, but you have to observe the amount that you earn, and the rate of its earning. This consideration will help you decide if you have to continue the investment or back it out immediately.

Conclusion

Investing may be an easy way to be successful, isn’t it. But before putting your resources, you have to be knowledgeable about what are the pros and cons of investments. If you fail to do so might lead to a waste of money, time, and effort. The question is, are you ready to make investments now?


Investing Help: What Are You Looking For?

When it comes to the world of investing, you need to acquire properly all the information and get as much help to professional or experts as mush as possible. There are a lot of ways in terms of getting the best investing help you need with your investments, most of which are free, but some can give you additional cost.

Before seeking any professional advice and help, you need to research personally via online access to get an initial assessment of your knowledge and know-how. There are many articles, data, list of reports, and information about investing and types of investments that you can find on the Internet. However, you do need to distinguish between reliable and unreliable sources. Government and sites of big companies are often the most reliable places that you can look for potential information.

Seeking professional help can often be the best choice before deciding to invest. It is their job to help and give assistance to people who need guidance. To any note, they have acquired all the necessary skills and knowledge about investing. The type of professional help can be of a financial advisor that help you manage your funds. However, they are not free and frequently, they will charge you a high fee depending on the number of hours spent in getting help.

Mentors are often very helpful due to their experience and knowledge they had gained over the long period they spent doing investing. They already know the tricks, techniques, and methods of making your investment to work accurately. Most likely they have gone through what you are going through and can offer first-hand knowledge based on their experience. Finding a mentor can sometimes be difficult but there are people investing in all kinds of places, so it is not entirely impossible.

Contact investors who have been successful with their investments. They often have the expertise and valuable knowledge needed to make good investment decisions.

Doing background research on the type of investment you’re about to take part in is often helpful as well. This activity is different to just researching online in general because it provides specific information on where you are going to put your investment. Knowing the background information of the stocks, property areas and companies can help you get the upper hand. Just make sure that you are always getting the right investing help that you are looking.


What Is an Investment?

One of the reasons many people fail, even very woefully, in the game of investing is that they play it without understanding the rules that regulate it. It is an obvious truth that you cannot win a game if you violate its rules. However, you must know the rules before you will be able to avoid violating them. Another reason people fail in investing is that they play the game without understanding what it is all about. This is why it is important to unmask the meaning of the term, ‘investment’. What is an investment? An investment is an income-generating valuable. It is very important that you take note of every word in the definition because they are important in understanding the real meaning of investment.

From the definition above, there are two key features of an investment. Every possession, belonging or property (of yours) must satisfy both conditions before it can qualify to become (or be called) an investment. Otherwise, it will be something other than an investment. The first feature of an investment is that it is a valuable – something that is very useful or important. Hence, any possession, belonging or property (of yours) that has no value is not, and cannot be, an investment. By the standard of this definition, a worthless, useless or insignificant possession, belonging or property is not an investment. Every investment has value that can be quantified monetarily. In other words, every investment has a monetary worth.

The second feature of an investment is that, in addition to being a valuable, it must be income-generating. This means that it must be able to make money for the owner, or at least, help the owner in the money-making process. Every investment has wealth-creating capacity, obligation, responsibility and function. This is an inalienable feature of an investment. Any possession, belonging or property that cannot generate income for the owner, or at least help the owner in generating income, is not, and cannot be, an investment, irrespective of how valuable or precious it may be. In addition, any belonging that cannot play any of these financial roles is not an investment, irrespective of how expensive or costly it may be.

There is another feature of an investment that is very closely related to the second feature described above which you should be very mindful of. This will also help you realise if a valuable is an investment or not. An investment that does not generate money in the strict sense, or help in generating income, saves money. Such an investment saves the owner from some expenses he would have been making in its absence, though it may lack the capacity to attract some money to the pocket of the investor. By so doing, the investment generates money for the owner, though not in the strict sense. In other words, the investment still performs a wealth-creating function for the owner/investor.

As a rule, every valuable, in addition to being something that is very useful and important, must have the capacity to generate income for the owner, or save money for him, before it can qualify to be called an investment. It is very important to emphasize the second feature of an investment (i.e. an investment as being income-generating). The reason for this claim is that most people consider only the first feature in their judgments on what constitutes an investment. They understand an investment simply as a valuable, even if the valuable is income-devouring. Such a misconception usually has serious long-term financial consequences. Such people often make costly financial mistakes that cost them fortunes in life.

Perhaps, one of the causes of this misconception is that it is acceptable in the academic world. In financial studies in conventional educational institutions and academic publications, investments – otherwise called assets – refer to valuables or properties. This is why business organisations regard all their valuables and properties as their assets, even if they do not generate any income for them. This notion of investment is unacceptable among financially literate people because it is not only incorrect, but also misleading and deceptive. This is why some organisations ignorantly consider their liabilities as their assets. This is also why some people also consider their liabilities as their assets/investments.

It is a pity that many people, especially financially ignorant people, consider valuables that consume their incomes, but do not generate any income for them, as investments. Such people record their income-consuming valuables on the list of their investments. People who do so are financial illiterates. This is why they have no future in their finances. What financially literate people describe as income-consuming valuables are considered as investments by financial illiterates. This shows a difference in perception, reasoning and mindset between financially literate people and financially illiterate and ignorant people. This is why financially literate people have future in their finances while financial illiterates do not.

From the definition above, the first thing you should consider in investing is, “How valuable is what you want to acquire with your money as an investment?” The higher the value, all things being equal, the better the investment (though the higher the cost of the acquisition will likely be). The second factor is, “How much can it generate for you?” If it is a valuable but non income-generating, then it is not (and cannot be) an investment, needless to say that it cannot be income-generating if it is not a valuable. Hence, if you cannot answer both questions in the affirmative, then what you are doing cannot be investing and what you are acquiring cannot be an investment. At best, you may be acquiring a liability.