Article Treasure Cove

The purpose of investing is to accelerate the rate of build up of our asset base. The accumulated assets form our savings and reserves. Investing like a bank means to lend this reserves an savings to ourselves and others.

The general public usually “invest” by sinking money into “investment vehicles” over which they have no control and that have front, back or both kinds of loads. These “features” make those investments unsafe.

This is my stance on investing: If I have to pay someone just to buy something in addition to having to pay for the thing I’m buying, that defeats the purpose of the investment because I’d be loosing money merely by doing business with them.

As a rule of thumb if I have to pay a broker’s fee, I need to get a deep enough discount to make all I pay less than what I budgeted for it. This rules out so called securities because they are too insecure, have loads and allow me no control.

In cases where price negotiation is not an option (as happens with securities) then it’s a bad investment. Why? Because if we can’t negotiate, we’re in fact giving up control of our money.

It’s not smart handing over our cash for a share of the business risks of some company while having no say as to how that money is used. Needless to say, banks invest differently, so if we’re going to invest like a bank we have to start making investments that allow us control.

Since knowing the definition helps in understanding the concepts behind the term being defined, let’s look at a definition of investment from Merriam-Webster’s Dictionary of Law, © 1996 Merriam-Webster, Inc. that I found on dictionary.com.

“Investment:
1 : the outlay of money usually for income or profit : capital outlay; also : the sum invested or the property purchased
2 : the commitment of funds with a view to minimizing risk and safeguarding capital while earning a return.”

The most important part of these definitions, and the reason I chose them, is that hope is not a part of them. Those definitions cover:
1- Commitment of funds
2- Intention to earn a return
3- Intention of safeguarding capital.
4- Desire to reduce or eliminate risk.

Using the defined term to name the vehicle used serves as a reminder to keep focus on the goals set. And the fact that hope’s out of the picture denotes that a plan exists (or should exist) to guide the action.

An investment plan based in definitions 1 and 2 above, would include guidelines for:
1- What the right attitude should be towards investing.
2- What criteria to take into account and why.
3- What to do exactly.
4- What to avoid.

A thing to avoid is, in my opinion, sinking money into the so called securities.

What bothers me about investing in “securities” is that they encourage the people running the companies to turn their concentration away from production and instead put their attention on the stock “performance” (under the excuse of “maximizing share holders returns”).

Such lack of focus on the things that matter to the company survival and growth means the company is chasing after the wrong vision. This in turn means the actions taken are irrelevant to (what should be) the company’s mission.

The most annoying “feature” of stocks as an investment vehicle is that the real monetary benefits go to some outsiders (brokers) instead of to the people who risk their capital to help the company. I want no share (pun intentional) of that.

So what do I think is the most right investment for those who want to keep control of their money? Well, the only one that historically has returned profits about every time since (maybe) the invention of commerce: Loans backed by collateral. Privately, if at all possible.

Established companies can’t be expected to go on a private borrowing spree obviously, but although they’re excellent examples to prove a point, they’re actually not our target. We’re into investing like a bank so we’ll just ignore them and invest according to definitions 1 and 2 above. We’ll target companies that compete in time sensitive markets.

It is very important to make people aware of this option because in addition to being lucrative and low risk, it is a way of investing that puts the focus on profiting you, the investor, instead of someone else.

If it’s set to work in cooperation with the rest of the money tools excellent results can be achieved.

For helpful tips about 3 way links – check out hyperlinked page.

Tags: investing like a bank