How and where can invest good investors ?

27.03.2013 23:19

Everything  what you have and everything what  you own  can be divided in terms of investments into four groups:
Your experience and knowledge
ASSETS – it is  what brings you the money.
LIABILITIES – thats what doesnt bring you money
TRIPODS – it is what absorbs your money


For example, a boat anchored in Croatia, a large pool, where you take a swin 3 times a year, BMW in the garage worth 3-millions.
Everything that brings you money can be called an asset. What doesn´t bring you money are called a liabilities and expensive consumables for improvement a life are called a tripods.
The main difference between investor and consumer is that investor devote most of his time to finding ASSETS, than searching for LIABILITIES or consumables and avoids tripods. And now we can answer our first question: Real investors invest in assets. Yes in assets, but they do it smart.
For example, the typical asset is an apartment that you buy and rent. This asset is very expensive, but it brings you several-thousand gain in rent every month. An asset is a car too, if it is for rent or if we employ people to drive it as taxi. On the other hand, the flat where you live or the car which you use yourself  is not asset. To have a home is ofcourse right, but if you have 10 000 Euros in assets and 200,000 Euros in liabilities and consumer goods, you are probably not a good investor .

 

How it is in your case? ...

Assets can be divided into good, average and bad.
If an asset is good, depends on its amount and on the ratio of money that you earn annually against the cost and the risk that it has for you. For example, if you buy a flat for 1 milion EUR and annually it earn on the rent 20 000 yearly income is 20 000/1 000 000 = 2%. What do you think, is it a good asset? Neither really not. Every year an asset like this earns for you 2 % invested prices.
We can reach a profit 2% at more amount on a certificate account in the bank, without we have anything to worry about and state guarantees us the full invested amount.
An good asset is if you have a review and for example if you bought office premises with an area of 100 m per 1 million, yearly you would earn at lease 200 000, annual income is 200 000/1 000 000 = 20 percent. Every year an asset like this earns 20 percent invested prices.
If you want to have income as investors, your main task is to find a good assets.
Not just any assets, but assests which brings you high profit. Do you think that there is some catch? It can not be just that simple? You're right, there is a catch. This catch is called risk. If you buy the flat as an asset, it is the risk that you may not be able to rent it. If you buy an office, the risk is that their tenants can move somewhere else. Dont believe that the bigger is the profit, the greater is the risk. This is only saying for the layman, but rich people see  it differently. You have to look for assets that will produce the good profit, but at a low or acceptable risk.
I would like to express it  by the formula
Risk = Profit x coefficient. OVS
R = 20% x 1 for lay person x 0.1 for expert
Coeff. OVS is your personal knowledge and experience and can be 0.1 to 1
Where 0.1 is a top expert - about 10 years of experience,


0.3 professional with about 5 years experience
0.5 have  a good overview and at least 3 years experience
0.7 to have the overview and at least 1 years experience


and 1 total layman in the area.
1 year is about 1,000 hours of work and study in the field
(that is to say intensive work and study may substitute 1 year for 3 common years)


Now your task is to do an overview in what you are expert and what you enjoy the most.


Property, the real estate sector
Stores with consumer goods
Transport and its agencies
Restaurants and catering
Financial markets and conventional products
Currencies and their relationships
Commodities and precious metals
Education and courses
Web site and stores
Handicraft work of its management and marketing
Art and art objects
Literature and book-production and marketing
Construction and renovation of buildings
Photo, video in terms of managing and marketing
Organization of conferences, festivals and other big events
Tourism and related marketing
MLM-business sales, recruitment, motivation


After evaluating choose 3-5 areas and look for assets in the area where you are at least 50% expert ,you enjoy that field and invest there ...
So if you invest as complete layman in office spaces which have possible profit of 20% your risk will be about 20%, but if the same thing does an expert in the domain, the coefficient.  will be only 0.1 therefore the risk is only 2%.
This applies to the stock market and other financial investments, too.

SUMMARY - what this implies

1) What earns you the most money? After all you yourself. You are the most valuable asset, your brain and your body. Therefore, the best investment what you can make is an investment in your education.
2) If you select or  someone offer you investment with potential profit 100% in the area where you are layman - the risk is 100%, conversely, if it is the area where you are leading experts, the risk is only 10% compared to the potential gain of 100%.
3) The size of the investment must be reasonable and you can use the same coefficient. If you are the expert your deposit can be 0.1 from tot. amount of investment, if you are the layman you should invest only up to the amount of your deposit, no credit if you put 0.5 ratio should be your deposit half of the total investment.
Attention to the investment that you can offer as expert on real estate, but you're not the expert. You need to consider not just what a professional he is, but what is a man, because if he is greedy, then he will also offer you the disadvantageous business, if he has a high commission from it.