Reflection on Consumption and Demand
If you analyze many consumptions closely, they are actually about enjoying the feeling of buying and owning at that moment. “Demand” is imagined. Ladies, do you really need so many shoes, so many clothes? Gentlemen, do you really need so many electronic devices? Take a close look—how many things in your home haven’t been touched in over a decade?
Advice for Short-Term Investing
Advice: “If you love short-term investing, it is best to start when you are very poor.” Since you will inevitably lose your principal, because you are poor, you won’t lose too much, but you can accumulate excellent experience.
Factors Determining the Price of Investment Goods
Whether the price of an investment good will rise in the future depends on whether the owner will be significantly wealthier in the future than they are now, especially for those who must own this investment good in the future—that is, the group with inelastic demand—whether they will be richer than they are now.
Investment Strategy: Following the Youth
All you need to do is follow the youth. You can observe the smartest young people of this generation, those whose future income growth is the fastest—where they are going, what they are doing, what inelastic demands they will have in the future. Go to where they are going in the future and buy the assets. When these young people arrive, the asset prices will rise.
Spend Today’s Money or Tomorrow’s Money?
Whether to spend today’s money or tomorrow’s money, the best judgment is to compare today’s income with future income. If you believe income growth will exceed 10%, but the investment return rate is only 5%, you should spend today’s money without saving it. If you believe future income growth will be lower than the investment return rate, you should diligently save money, saving and investing as much as possible.
The Importance of Investment Return Rate
Your investment return rate must exceed the income growth rate of your demographic. Only then is it a good investment; otherwise, it is actually a depreciating investment, and you might as well just consume it directly.
Lessons from Detroit Real Estate Investment
In Detroit, USA, if you bought property there in the 1950s, you would find that no matter how you bought it, you made money, because workers were constantly pouring in, and American-made cars were sold all over the world, bringing all of America’s money to Detroit. However, after the 1980s, if you still held Detroit property long-term, no matter how smart you were, your money would become less and less, because the industry declined, and the population was leaving.
Strategy for Middle-Aged and Elderly Investors
Middle-aged and elderly investors must not only focus on what the people around them are investing in. They must also look at what the young people are preparing to invest in, because the youth are the hope of the future.
The Optimal Time for Real Estate Investment
The best time to buy a house is after the property price has risen a bit from the bottom—it doesn’t need to rise much, maybe around 5%. Wait until the market trend is basically established, and then go in and buy.
The Core Secret of Stable Real Estate Investment
The second core secret of stable real estate investment is maintaining positive cash flow, which is often the dilemma that investors face forever.