- November 6, 2018
- Posted by: Chowdhury Shahid Uz Zaman
- Category: Investment Strategies
In the last book by Robert Kiyosaki, “The Game Of Money”, there are 7 ways to find good investments. The interesting thing about these forms is that they are good enough to take into account because there can always be doubts when looking for investments.
Basically the idea of investing is trying to find where to put our money where other people are not doing it.
Usually when we see that everyone invests in the same, it means that at any moment that market will fall or that it is already too late to invest there too. When an investment becomes popular, it stops being a good investment.
That’s why I’m going to mention the 7 ways that Robert Kiyosaki offers to find and find good investments …
1) Remember that people are Lemmings
One of the best ways to find an excellent investment is to wait for amateurs to enter the market.
They always come in late and because of this they create a frenzy, they start to pay too much for their investments and they manage to get the prices going up. But then the market collapses and that’s where the real investors enter the market to find the best investments with the best prices.
This works for any asset class, be it business, real estate or paper assets.
That is why you have to try to see where the Lemmings are acting and in this way when the market collapses, you will discover many investment options at prices much lower than those Lemmings were investing.
This first way to find an excellent investment requires that you keep some things in mind …
- The Lemmings arrive late and the real investors early. This applies both to the purchase and the sale.
- It is easier to find excellent investments in a bad market than in a good one.
- When the markets do not go well, the Lemmings full of fear escape from there, but in turn investors enter and become rich.
- You can make money when a market is not going well, obviously being cautious and evaluating your investment.
- When markets are good, the most difficult thing is not to be a Lemming. But when markets are bad, the most difficult thing is to be a good investor.
2) Personal tragedy or calamity
I do not think that this is the best way to find an excellent investment or rather it is not the one I would feel comfortable with because of my personal ethics, since it just tries to obtain a good investment based on someone else’s problem.
This could be, for example, someone who is heavily indebted and is selling a house at a relatively low price. Although it is not our problem, there is always a degree of awareness where you know you are having an opportunity based on the misfortune of others.
But this way of finding an excellent investment is not excluded, because it can be one of the ways in which at some point you find a good investment.
They can be due to other people’s debts, unexpected trips, auctions, etc.
3) A recession
A recession is simply a contraction of the economy.
Obviously this fact brings commercial and personal problems, this is where many businesses, for example, sell their businesses and equipment in cents of what they were worth.
Lower the value of properties, cars, boats and many objects that people cannot keep.
An example that is mentioned in the book “The Game Of Money” where the owner of a .com, during the golden age of his business bought many toys (including luxury cars, boats, houses and others).
However, after the .com explosion, he began to sell all his goods because it was impossible for him to keep them now. The owner of the company was happy to find people who bought their objects and the buyers were happy to find precious objects at such low value.
4) Technical, political and cultural changes
Throughout the history of humanity there have been and various changes have been made that allowed many people to find opportunities to get ahead.
These changes can be from political changes where we find new methodologies to invest, to changes in the laws that open new paths.
Here there is not much to explain and the examples could be countless, but taking an example, it happened in Argentina before its crisis. If many people had known that the Argentine peso would stop being equal to the dollar (was it really?) They would have started to buy or dollars or expensive objects, to sell them later and get a great advantage.
5) The cycle 20-15-5
This is the famous cycle that his rich father taught to Robert Kiyosaki, he says the following …
“The stock market dominates the investment market for a period of 20 years. As soon as the 20th year arrives, the possibility of a collapse increases. After this crash, the stock market tends to stay down for 10 years. During the 10 years that the stock market is down, products such as gold, silver, oil and property dominate the world of investments. Finally every 5 years there is some kind of major disaster.”
While it is not having the “crystal ball” about the future and the destiny of life, this rule tends to manifest itself quite well.
Again, it is not about you possessing the ability to guess the future, but to be aware of the periods and changes that may occur.
So the advice I give you in this part is that you do not fully trust the 20-10-5 cycle, but that the investments tend to move in cycles and that you should know approximately what cycle you are in.
It may be a few more years or a few years less, but this cycle tends to be seen in investments.
6) Having a friend in the business
Surely you already know that the best investments are not announced for sale.
That’s why the best way to find an excellent investment is to have friends or acquaintances in the market (Does the word Networking tell you something?) To let us know about the news.
So this rule is not limited to some kind of special relationship with a certain type of people.
Here you will have to begin to weave your network of contacts and strengthen those ties in order to find excellent opportunities.
7) Pay more money
One of the examples mentioned by Robert Kiyosaki is when a person meets him and his wife Kim with the aim of buying one of their properties. When they asked the price of the property they told him that it cost about 2.5 million dollars. Faced with this response, the buyer asked to lower the price to 1.9 million dollars. There they ended the talk and stayed with their house.
Why Robert and Kim, demanded that high price and did not want to lower it?
They demanded that price because they saw the business that the buyer did not see.
They did not have a simple land and a motel, but they owned a motel that they would throw down to build a hotel complex that would generate a huge flow of cash and worth more than 4 million dollars.
That’s why in investment and wealth generation issues do not always try to bargain or negotiate.
There are techniques to negotiate better, but bargaining is not one of them because if you bargain with the wrong person, you will take it as an insult.
Would you demand haggling a sale of a future land with a value of more than 4 million, when they offer you only 2.5 million dollars?
So these are the 7 ways to find an excellent investment that Robert Kiyosaki explains in his book “The Game Of Money”.