Everybody may know from the beginning of the year that there was going to be a recession, but hardly anyone would think that it would turn out like the current situation. The current economic situation is not a laughing matter.
The virus outbreak may possibly end soon, but its consequences may remain for a while. However, this is also an interesting time of great changes, as well as a unique opportunity, as many businesses will be wiped out but some new ones will also be established. This period is similar to that in 2008. It was a bad time, but it was time for new wealth to be created.
There are opportunities abound, but they will be disguised as risks. The secret to investing is to do the opposite of what people are doing, that is to buy when people are selling and to make the sale when people are buying.
It could be foolish to expect the economy to return to normal, as central banks have injected "stimulus" packages into the economy, resulting in people having to pay taxes later. However, this is a "once-in-a-lifetime opportunity" for investors to double, triple, and even quadruple their net worth, if they know they accurate way to do so.
If investors really want to be rich, it could be advised that they follow these 6 investment rules introduced by Robert Kiyosaki highlighting the way wealthy people invest.
The rich don't invest their money, as they understand that instead of currencies, which is not tied to anything, debt is the true monetary itself. People often carry the psychology of purchasing before paying, and even governments also implement this principle a lot, which is why they use debt.
Those who imitate this method are also very intelligent. They tend to borrow money (with ridiculous interest rates, which is sometimes close to zero) and invest in what will bring them good returns.
However, this method is not for everyone, as it requires the will, teamwork, and accurate instructions.
According to Robert Kiyosaki, there are 3 types of income. The first one is earned earnings, which is the salary or wages for your work. The second one is investment income, which is the income from the sale of assets or investments (and is also known as capital gains).
The third one is passive income, which is the income that the property generates regularly to your account. As passive income is rarely taxed, and as the most expensive expense of business is tax itself, only passive income will reduce your taxes to a minimum.
This is related to financial education. Robert worked in the real estate industry, thus giving him the financial education background and knowledge related to it to put into use, so he decided to focus on it while staying away from everything he did not understand.
If people want to be certain about the profit they will receive when making an investment, they need to make sure that they thoroughly understand how the industry or the market works first.
Passive income must be based on an appropriate basis, and it will only generate benefits if people invest in profitable categories which are unlikely to create a loss for them.
This often requires investors to use the debt to buy the property which has the ability to generate a higher return than the money they paid to buy it in the first place.
An entrepreneur has two jobs. The first is how to increase income and the second is how to increase assets, and both of them involve risks. Using debt to buy assets is risky, and so is investing in panic times.
However, in order to be able to invest, one has to be willing to take risks.
The wealthy tend to think first about what they want to do before making the decision to raise capital, which is a skill that all investors and entrepreneurs must master, and in order to do so, it is required that you learn the skill carefully. It is easy to invest when money is available, but a true investor is the one that could show people what he is capable of without the money.
The best time to start a business is in the middle of a recession, as the entrepreneurs will learn to grow in the harshest conditions, thus when the good times come, their business will flourish. A time of crisis like this will tell you which businesses really have the capability for growth, which are the companies that are born to lead the industry in the coming years.
If people are considering investing in a startup, this is the best time for them to "separate the wheat from the chaff". It is recommended that they should keep an eye on the thriving startup companies during this time and analyze the reasons for their growth. Sometimes they may last longer than expected, still holding steady while other businesses are struggling, but still eventually collapse.
However, that is not a failure. An intelligent investor must understand the reasons why the business could survive for so long, such as a strong-willed CEO, etc. which will possibly help them to be even more successful in the next business.
Investing is not selling at high prices, but buying at lower prices. However, many people do not know how to sell at high prices, let alone how to buy at low prices. This requires discipline, which can stop people when they are too extreme, and encourage them to invest even when they are in fear. Investment is not selling at high prices.
It is ill-advised to assume that you will sell at a high price in the near future. Usually, those who desire to sell at a good price will be greedy and hesitant from time to time, resulting in the loss of profitable opportunities.
The correct expectation is to sell and earn profit at market prices. This is why people need to buy when prices are low to get profits. A competent investor will not buy an item if he does not think that it is undervalued, which is one of the core principles of effective and profitable investment.
Recession is a good sign for an economy reset, which re-establishes the foundation and makes room for new leaders. In the coming weeks and months, the impact of the economy closure will begin to fade, and we will see the economic tycoons being stagnant again while new leaders standing out.
There will be acquisitions, as well as new millionaires and billionaires. This is an exciting time for us to survive. 2020 will be a vibrant economic year ever in the decade, and all investors are trying to find a way to survive and win this fierce war.
An investor should not be made panic by the opinions of anyone. This period is just an event in the long history of humankind, which will come and go. Therefore, it is necessary for investors who decide to buy any property or invest in something to do it systematically instead of panicking and buying lots of reserves. It is unwise to assume that the market is currently at the end of the stagnation, thus suggesting the need for a discipline to purchase.
Another tip to investment in this period is to see what the wealthy are doing. Those people may know what will come better than the average people, thus making better decisions in spending their money. Following their footsteps can bring average investors profit or, at least, limit their losses.
This epidemic is the best chance for people to start their business. It is true that this is not a good time for business, but the resilience a business has over a period of time like this can give it the credibility for (at least) a decade.
A moment like this probably will never return in the next decade, therefore all businessmen and investors should do all they can to take advantage of this moment.