I notice some people like to make easy things difficult especially when it comes to wealth creation. I have shown numerous results proving how simple and powerful value investing can be. I’ve even revealed my own investment statements and dividend cheques as concrete PROOF that you can make money in the stock without having to spend a single second looking at charts, constantly reading macro-economic news or trade in any instruments whatsoever.
The key to investing is this: identify great businesses (with a strong competitive advantage) led by the right management and buy them at the right (undervalued) price! After which you simply let time compound your investments – giving you FAT dividend income and massive capital gains while you sleep. It is the same as buying a property, fully tenanted, at a great location at an undervalued price. The property value (note that I am not referring to price) and rental yield will keep appreciating every year!
Now you might ask me what happens when the stock market crashes? Well, I would even BUY MORE! In fact, I want to own as much and as many of these type of businesses and assets without actually having to run them. For example, my team member, Kenji, watched the watch business (pardon the pun) he invested in jump 21.4% in value while he’s on a month long holiday in Europe! Now this is the true time and financial freedom.
Value investing gives me the time and passive income to scout for even more similar undervalued opportuni- ties that will give me again more time and passive income to… you get the idea. With this time and financial freedom, I can spend real quality time with my family and friends and, at the same time, enjoy the best life can bring. Also very importantly, I can contribute to communities in a larger way because I have more resources to contribute! You can only give more when you have more.
Camping in front of the TV set or computer screen trading, monitoring the news, charts and price tickers late into night is working for active income (no matter how “little” time you spend on it). It becomes a JOB and it’s risky because:
If you stop trading, your income stops. This is called earning a paycheck rather than creating wealth. You are not guaranteed a paycheck after your “work” – I rather prefer for you to have a regular 9-5 job because chances are you’ll get paid more with benefits thrown in as well! You will miss out on truly great investment opportunities because you are too busy trading.
Most importantly, all the time spent in front of the screen means you’ll miss out on precious time with your family. Now I know there are many success- ful traders out there doing what they do, but trust me, they ALL invest as well. Because they know they can’t work forever and they need to park their money somewhere where it can grow safely and securely.
Lastly, I would leave you with an elegant quote by one of my mentors – my investment idol and the legend of value investing:
There seems to be some perverse human characteristic that likes to make easy things difficult.”
– Warren Buffett
In the meantime, if you have not got a ticket to next year’s Value Investing Summit happening 26th-27th January, then, are you missing out BIG time. This is the biggest value investing event in the region and if you want to invest and build real lifetime wealth, you NEED to be there!