If not Cash, then what are the “Really Real” Assets to Invest?

people real asset

[dt_gap height=”10″ /][dt_gap height=”10″ /]In a distant country, there lived a prosperous money lender. His business was flourishing and he appointed a smart business manager to take care of his operations. The manager was shrewd and he learnt the nuances of the business quickly. His boss was impressed and made him in-charge of almost everything.

[dt_gap height=”10″ /][dt_gap height=”10″ /]Everything was going fine until one day, the internal auditor pointed out some discrepancies in accounts. Apparently, the manager had misappropriated a lot of money. The boss was furious and decided the fire the manager right away. However, even before the termination notice was given, the shrewd manager came to know that there was bad news awaiting him.

[dt_gap height=”10″ /][dt_gap height=”10″ /]He embarked on a plan. He made a list of all NPAs (Non Performing Assets) and defaulters. Basically, these were those people who were not able to pay their installments on time and therefore were liable to exorbitant penal interest.

[dt_gap height=”10″ /][dt_gap height=”10″ /]He checked the records and found out how much they owed and then he called each one of them for a personal meeting. He said to them, “I am waiving off your penal interest and I am writing off half your outstanding amount as bad debts (accounting terminology for those debts that are never recovered and so written off as business expense).”

[dt_gap height=”10″ /][dt_gap height=”10″ /]The debtors couldn’t believe their ears. They exchanged visiting cards and parted.

[dt_gap height=”10″ /][dt_gap height=”10″ /]He did that with each of the defaulters and in the process earned a lot of friends. He was investing in making friends on whom he could fall back on during the bad times in future.

[dt_gap height=”10″ /][dt_gap height=”10″ /]Moral of the story: Even the shrewd lender knows, his real assets are people, not cash.

[dt_gap height=”10″ /][dt_gap height=”10″ /]Now, I am not saying you cause loss to your boss and make friends. But rather, I am emphasizing the importance of investing in people.

[dt_quote background=”fancy”][dt_gap height=”10″ /]You don’t invest in real estate. You invest in a reputed and trustworthy builder. Be friends with him.
[dt_gap height=”10″ /]You don’t invest in shares. You invest in an honest broker or financial planner. Be friends with him.
[dt_gap height=”10″ /]You don’t invest in education. You invest in a good teacher. Be friends with him.
[dt_gap height=”10″ /]You don’t invest in healthcare. You invest in an expert doctor. Be friends with him.
[dt_gap height=”10″ /]You don’t even invest in your business. You invest in your employees and your customers. Be friends with them.[/dt_quote]

Qualities of "Really Real" Assets are:

  1. No decay or deterioration, that is, they don’t lose value over time. They keep appreciating in value.
  2. No one can rob you of them. So you can save yourself expenses on security.
  3. No sudden loss. No parasites eating away your hard earned wealth causing you to lose everything suddenly

Principles for investing in "Really Real" Assets.

1. Reward the Person

  • Be generous. Give a tip to the waiter.
  • Don’t bargain with the vegetable or fruit vendor or rickshawalla. Give him a little more than he asks for.
  • Thank the courier guy who delivered your online shopping parcel on time. Give him a return gift or a tip.

These are small investments of everyday life. But there can be others also.

  • Send a letter of appreciation to your subordinate
  • Buy a shirt for your boss.
  • Give a surprise to your spouse.
  • Take your child out for a ride.

2. Plan your Charity

We plan for a lot of things. And we also do a lot of things on impulse.
Retail chains arrange and re-arrange their racks to trigger impulse buying because they know customers buy things which are not planned for.

Mostly, we also do charity on impulse. Its rarely planned.

It is a good idea to plan for charity and include it in your financial plan and your monthly budget. 10% of your income is a good budget to start with. If you think that’s too much, think of what percentage of your income you spend on personal expenses, entertainment or even impulse buying. It would usually be around 10% or perhaps more.

Invest in people with that 10%. Experience the joy of giving.

3. Become a Mentor

Investing can also be non-monetary. You can build someone’s life by sharing your experience and knowledge.

  • Help people get into a better job or help them do their business better
  • Educate a child, even your own.
  • Train your employees / subordinates. And so much more…

I am not saying that you should get on to a preaching mode every time. But helping others do their work better is a great investment. Even if it means helping your children with their homework!!

All of these would sound strange advice coming from a Personal Finance Coach. But as I discussed in my previous article: Cash is not really an Asset. It is just a tool to invest in “Really Real” Assets.

Further, all that is discussed above would be classified as “Expenses” in the Profit and Loss (P&L) Account. But they are really “Investments” in the Balance Sheet of Life (BOL). Happy Investing!!

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If not Cash, then what are the “Really Real” Assets to Invest?
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