Investment Strategies: Stocks vs Real Estate vs Gold vs OPM (Other People's Money)

 Stocks:

Stock represent a piece of a company. It is wealth that you own. Stock market is driven by mass emotion. Learn to use this emotions to your favor. So if you are in charge of your emotion during its highs and lows, then you can do much better.

Based on my experience, Stocks always outperform other investment strategy. 

Software technology stocks are great in short run, but a drag in the long run. Hardware/telecom equipment stocks are much worse than their software counterparts.  Based on historical data, airline stocks are always bad to own at anytime.  Choose a company that provides service or products that common people like us use everyday, and stick to it for the long run. If you can do so, a good return on your investment is guaranteed.

Real Estate:

Real estate is the next best investment strategy. You have an option to buy the asset with only 20% down payment, and the rest of the payment is usually supported by banks in the form of mortgage loan(OPM). This is great, moreover real estate market crashes very rarely. In most cases, the asset grows up in value every year. This is the only investment strategy where you can lock-in the rate of an asset in today’s value which you will eventually own 20 or 30 years later. 

In case when you don't have enough money to buy physical asset, then you can still make money by investing in real estate investment stocks such as e-REIT and m-REITs.

Where,
REIT - Real Estate Investment Trust
e-REIT means Equity based REITs - Revenues come principally from their properties rent.
m-REIT means Mortgage based REITs - Revenues are generated primarily by the interest that they earn on the mortgage loans.
 

Gold:

After real estate, gold is the next best strategy. To be honest, I do not like this asset class, but there is a potential to make big money in the long run. The problem with physical gold is, you can only make money when you sell the gold, which in most cases very hard thing to do for anyone. Just imagine if you can sell gold every month, and take your profit every month. That will be awesome, so I decided to buy stocks of the number one gold mining company. Now I own an asset(business) that produces another asset(gold) every day, and shares the profit with me on a monthly basis in the form of dividend.

OPM:

Other People Money(OPM) is similar to drugs. There are good use of OPM and there are some bad use of OPM. Home mortgage loan is an example for a good use of OPM, and credit card debt is an example for a bad OPM. Any manageable amount of OPM will help you grow financially stronger, and unmanageable large amount will kill you financially in the form of bankruptcy and foreclosure. Choose wisely on the amount of use of financial OPM that you are comfortable to take, when building your financial nest egg.

I have a habit of listening to audio books. That’s the best use of my iPhone. I connect my iPhone to the car audio system and listen to the audio while driving. I have to tell you, it is much much better than listening to music. In last two years, I have covered more than 30 audio books.

Listed below are the books that influenced me the most.

Rich Dad Poor Dad by Robert T. Kiyosaki

Rich Dad's Cashflow Quadrant by Robert T. Kiyosaki

Tap Dancing to Work by Carol J.Loomis

The Richest Man in Babylon by George Clason

Thanks to all the authors for your efforts. Also search for Warren Buffett speech in youtube. He is one of the biggest inspiration for me. Thank you Mr. Warren.