There are some major investments that all wealthy people have. This is because these investments give above-average and sustainable returns.
In this article, we will look at 5 best investments you can make if you want to get and stay wealthy. These investments have proven to provide value over the years for the long term.
When we talk about investments, we are talking about putting in the resources. These resources can be financial, time, physical effort, emotional investment, or otherwise.
It is important to clarify because when many people hear the word investment, they only think of money. However, success costs more than money. It does not always take money to make money. You can use your knowledge, skills, and even sheer will.
Let us look at each:
5 best investments you can make
The greatest investment you can make is in yourself. Invest in your education to get knowledge. When we talk about education, we are not just talking about going to school but everything else that can give you knowledge.
When a person comes to you to seek your investment advice, be sure to give them this tip first. Ask them to invest in their financial education first. This is the most basic investment that successful people make.
Anyone that invests in real estate, stocks, or even a business without first getting relevant knowledge is just wasting precious hard-earned capital. This is because they will lose it sooner than later. You cannot survive as a business person or investor without having business and financial education.
Have you heard of people who won millions in a lottery and lost it all in a few months or years? I have heard many of those stories. It is said that many people of these winners go broke before 5 years are over. They will always mismanage the millions because they do not have the skills of protecting and multiplying money.
Education is the firm foundation over which you build your financial empire. Without education, the whole empire will come crumbling.
Why do all entrepreneurs fail first before they succeed? This is because people do not start businesses knowing all the important aspects of the business. As they fail over and over again, they learn. They can now differentiate between what works and what does not.
Today, education is as cheap as free. You can get eBooks all over for free. There are billions of blog posts that you can read and enrich your knowledge for free. This means that there is no excuse.
I have made a habit of buying books over time. These books form a library in my house. I read a lot every day. This is why I run several businesses successfully and write for international sites and magazines. It is the knowledge I have accumulated over time.
All successful people have libraries in their houses. They are ever reading books. I am not talking about soft copies but hard copies. Hard copies provide a better reading experience than soft copies. If you think they are expensive, then you are not ready for success.
One person said that if you think education is expensive, try ignorance. Ignorance can cost you millions. Knowledge will only cost you a few dollars. It is just a matter of deciding.
I hear people telling me that they do not have the grace to read and I wonder. How do they expect to make it in this information age? In this age, it is what you know that gives you leverage. Such people end up getting average results throughout their lives.
Getting knowledge can also mean enrolling for an academic course. If you need to become a better business manager, an MBA would be a good course to study. If you want to become a better investor, you can take CFA or a course in Finance.
Similarly, seminars and online courses are very important. These classes are taught by successful experts who have learned through failure. They can guide you in your quest for success. Do not take it as a waste of resources to pay for a seminar or an online course. One of them can change your life forever.
The message here is that you need to invest in your own knowledge and education. Embrace life-long learning. As they say, investment in education pays the greatest dividends. Set a budget every month to invest in your own learning and you will thank me later.
The second best investment you can make is in your own businesses. If you look at the richest people in the world, they are all business people. Even if you look at your country, the richest people are business people.
The business failure rate is very high. Research shows that 90% of businesses fail before their 5th birthday. That means that only 1 out of 10 survives for over 5 years.
To succeed in business, you need the following things:
- Business knowledge. You need to know how to gain a competitive advantage, develop quality products, lead teams, sort financial books, negotiate deals, do payroll, pay taxes, do sales and marketing, and so on.
- Passion for what you do. Passion is the fuel for hard work. It acts as a lubricant. No matter how hard you work in your area of passion, you cannot burn out. You will develop extra-ordinary strength to keep working long hours every day.
- Perseverance. Businesses take time to break even. Most probably, for the first few years, you will be making losses. If lucky, you can break even in a year or less. Therefore, you need perseverance. You have to keep working even after making losses. Even when no tangible results can be seen, keep putting in the investment.
- Hard work. Entrepreneurs invest between 14 and 18 hours in their businesses every day. They work even during the weekend. Every day is a working day and every time a working time. There is a saying among entrepreneurs that says that we do not sleep when we are tired but when we are done.
- A heart of service. All entrepreneurs love to serve. They love to offer value to people. This is the secret of all business success. Look at Bill Gates, we use windows developed by the company he started. Consider Mark Zuckerberg, he made communication and interaction easier for all of us. Look at Sergey Brin and Larry Page, they brought timely and relevant information to our homes. If you want to be successful in business, look for a problem to solve and people will line up to give you money.
- A growth mindset. All entrepreneurs have a growth mindset. They are never content with where they are. They work hard to move to the next level. Even when they are making millions in revenue, they continue pushing the limits.
Therefore, investment in starting and growing your business is one of the best things you can do. Put money and effort into growing your market share and revenue and you will create wealth for yourself. The good thing is that after you are gone, your children will inherit the businesses.
3. Real estate
Real estate has always been one of the best investments in life ever. This is because real estate is always in demand because of the continuous increase in population over the ages. As people increase in number, they demand land and houses. If you can find a way of supplying these two things, you will become successful.
Unless there is a depression, real estate will always appreciate in value. You will never buy a piece of land and sell it at a loss unless you are in a hurry to sell it.
The good thing with real estate is that banks love real estate investors. They are always ready to fund real estate investment. This is because they understand that it is the safest investment in the world.
This means that you do not have to use your money to buy or build an apartment for rent. You can just borrow from the bank and use the apartment as collateral.
Make sure you understand the needs of the people in the location you want to invest in. Do they want commercial, residential, or mixed-use real estate projects? If you make a mistake, you will make losses.
Be sure to charge an amount of rent that is acceptable in the market. Also, let the monthly rent service your loan plus the interest and still leave you with some profit. Therefore, pricing is crucial.
Stocks are still an attractive investment. However, choosing the right stocks requires great expertise in the field. You have to be able to judge the present and future state of the company rightly.
If you buy the wrong stocks, you will make capital losses. Capital losses occur when your selling price is lower than the buying price. That means that the cost of the stocks is greater than the revenue you get after you sell them.
If you choose the right stocks, you will make capital gains. This is the opposite of capital losses. The revenue you get after the sale is greater than the cost of acquiring the stocks in this case.
Stocks appreciate based on public trust. When people trust the offering company, the price of its shares goes up. If people feel that the company is headed in the wrong direction, the price of the shares goes down. This is just it, nothing much.
There are therefore many factors that affect public trust in a company. These include:
- General trust. There are companies we trust just because they have positioned themselves as market leaders over time. People tend to buy shares from such blue-chip companies.
- Change in management. If people feel that the new management will be effective, they demand the stocks and the price goes up. The vice versa is also true.
- Development of new products. When a company announces that it is developing high-quality products, people will rush and buy its shares. The price will go up.
- Investment by a strategic investor. When people realize that certain influential people or firms are investing big amounts of money in the company, they rush and buy the shares.
Over and above capital gains, it is also important to invest in companies that have a favorable dividend policy. Some companies give dividends and others do not. As a beginner, invest in those that pay dividends every year.
5. Precious metals
Gold and silver are still good investments today. The prices of these metals have risen steadily over time.
Investment in these precious metals is also a good way to store wealth. This is because they rarely lose value. Other than storing your wealth as bank savings, you can buy gold and hold them for the long term.
Final thoughts on best investments
These are the 5 best investments you can make today. However, the basic and the most important is getting investment knowledge. That does not mean that the rest is not important. No matter how much knowledge you get, it will be in vain if you do not implement it. Just invest.
Keep putting in the money and the effort in these 5 areas and you will create wealth over time.
Founder/ C.E.O- Wealthy Wolves Consulting & Giimark Ltd/ Best-selling Author/ Speaker.