The Big 8 Formulation of Financial Quotient (Part 3)
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# 5. YOU MUST HAVE LEVERAGE
If you've found a mountain that will be excavated and searched for gold nugget, it's time to design a lever tool. What separates the rich and the middle class and poor people is ownership of leverage.
Leverage is something that makes your assets will grow up following with doubling time. Leverage comes from the system created in such a way that no longer depend on a particular person. With leverage, we can move the boulder that is not possible we can lift alone.
For an example. A bakso (meatballs in Indonesia) seller reaches maximal turnover of $ 100 a day. He wants to double its sales to $ 2000. One step which he can do is open the branch. With 20 branches, it reaches the targeted turnover. Of course, to open a branch he must train employees and staff, standardizing recipes, and create the look of outlets with specific characteristics. No less important, he must choose the appropriate locations in order to achieve sales targets.
But the next day, He is not satisfied with turnover of $2000 a day. He wanted to $10.000. How? After consulting and ask for everyone whom had sales experience, he decide to makes a franchise system for his products. He designed a promotional strategy to increase brand products, also for the investors interested in acquiring his license meatballs. With a franchise system, he had no trouble reaching the desired target.
#6. LET THE MONEY WORK
If the system is working properly, now it's time to raise money. That work is now not the person, but his money. People may rest, doing whatever became his hobby, or looking for new ideas to explore other business areas to strengthen its business network. But the principle, the money during these labors, it's time to be a major asset that provide cash on a regular basis.
You can do this trick. Spread the money into various investment instruments. Spread the risk according to the desired scale, in order to avoid a total loss. If the money is quite a lot, more diverse options available.
The most conservative institutions such as banks, will definitely be tempted. They will offer special rates if the owners want to place their money in the bank.
Deposits and government bonds are believed with minimal risky investment alternatives. Then there are corporate bonds and stocks, the risk is higher. But of course, if the risk is high, also had high profit opportunities. Placement of cash in non-bank financial institutions, may be willing to give higher interest rates than commercial banks. But the risk is also higher. Playing foreign exchange risk is also higher, although you will likely get bigger and faster gains. So between risk and profit levels are always directly proportional. Here the role is your calculations, as well as guts.
The property is an investment alternative which has been a favourite. Buying an apartment, house real estate, or vacant land in strategic locations, will usually give a nice profit. However, its location must be strategic. Much easier to sell expensive assets in strategic locations instead of cheap assets in locations that are less developed.
Compared to bank deposits, stocks and forex, property slower cashed. So it is more illiquid. However, there is a double advantage that you can get. The first is a rental income property, the second is the equity that you definitely get over rising property prices. Property is the only asset / assets whose value never goes down.
However, the property sector also has its own tidal cycle. In 3-5 years, usually the market stagnation. Such conditions occur when economic growth slows, interest rates crept up, and inflation increases. Currently, the companies property difficult to sell their products. In contrast, the secondary market is very crowded. Many people sell homes, probably because it needed cash.
Always update for information, until you know exactly when moments like that happen. That's the right time to buy because prices are usually set below the average standard. We make a profit at the time of purchase, not when we sell. (Financial Quotient.. To be Continued)
If you've found a mountain that will be excavated and searched for gold nugget, it's time to design a lever tool. What separates the rich and the middle class and poor people is ownership of leverage.
Leverage is something that makes your assets will grow up following with doubling time. Leverage comes from the system created in such a way that no longer depend on a particular person. With leverage, we can move the boulder that is not possible we can lift alone.
For an example. A bakso (meatballs in Indonesia) seller reaches maximal turnover of $ 100 a day. He wants to double its sales to $ 2000. One step which he can do is open the branch. With 20 branches, it reaches the targeted turnover. Of course, to open a branch he must train employees and staff, standardizing recipes, and create the look of outlets with specific characteristics. No less important, he must choose the appropriate locations in order to achieve sales targets.
But the next day, He is not satisfied with turnover of $2000 a day. He wanted to $10.000. How? After consulting and ask for everyone whom had sales experience, he decide to makes a franchise system for his products. He designed a promotional strategy to increase brand products, also for the investors interested in acquiring his license meatballs. With a franchise system, he had no trouble reaching the desired target.
If the system is working properly, now it's time to raise money. That work is now not the person, but his money. People may rest, doing whatever became his hobby, or looking for new ideas to explore other business areas to strengthen its business network. But the principle, the money during these labors, it's time to be a major asset that provide cash on a regular basis.
You can do this trick. Spread the money into various investment instruments. Spread the risk according to the desired scale, in order to avoid a total loss. If the money is quite a lot, more diverse options available.
The most conservative institutions such as banks, will definitely be tempted. They will offer special rates if the owners want to place their money in the bank.
Deposits and government bonds are believed with minimal risky investment alternatives. Then there are corporate bonds and stocks, the risk is higher. But of course, if the risk is high, also had high profit opportunities. Placement of cash in non-bank financial institutions, may be willing to give higher interest rates than commercial banks. But the risk is also higher. Playing foreign exchange risk is also higher, although you will likely get bigger and faster gains. So between risk and profit levels are always directly proportional. Here the role is your calculations, as well as guts.
The property is an investment alternative which has been a favourite. Buying an apartment, house real estate, or vacant land in strategic locations, will usually give a nice profit. However, its location must be strategic. Much easier to sell expensive assets in strategic locations instead of cheap assets in locations that are less developed.
Compared to bank deposits, stocks and forex, property slower cashed. So it is more illiquid. However, there is a double advantage that you can get. The first is a rental income property, the second is the equity that you definitely get over rising property prices. Property is the only asset / assets whose value never goes down.
However, the property sector also has its own tidal cycle. In 3-5 years, usually the market stagnation. Such conditions occur when economic growth slows, interest rates crept up, and inflation increases. Currently, the companies property difficult to sell their products. In contrast, the secondary market is very crowded. Many people sell homes, probably because it needed cash.
Always update for information, until you know exactly when moments like that happen. That's the right time to buy because prices are usually set below the average standard. We make a profit at the time of purchase, not when we sell. (Financial Quotient.. To be Continued)
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