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Money is No Longer Needed to Make Money

Since young, most of us are inculcated with the thought of exchanging time and labour for money. This is called Active Income.

Robert Kiyosaki, arguably the most famous personal finance guru of the world, introduced to many around the world, including us at ITP, the concept of using money to make money. This is called Passive Income.

Robert Kiyosaki always goes around shouting, “Savers are losers!!!”, which is indeed true as savers lose out to inflation. While it is very important to save, but Robert Kiyosaki’s idea is not that we should spend our monies instead of saving them, instead, what he meant is that we should save our monies and spend them on Assets.

Effectively creating a situation of using money to make more money, this will make us investors.

Contrary to what people always propagate about using money to make money, Warren Buffett actually says that money is no longer needed to make money!!!

The Most Accomplished Investor in recent history

Hands-down, the most accomplished investor in recent history has got to be Warren Buffett. The Oracle of Omaha is a renowned value investor and is the only one in Forbes Top 10 richest person in the world to have made his fortune through investments. The rest made their fortune through the ownership of their companies.

Coming from the Grahamian philosophy of investing, Warren Buffett, in his younger days, many many years ago, likes companies that trade below their asset value.

This is because, the stock market will eventually re-adjust the stock price the company to reflect the available assets of the company.

To make sure the company is really worth some money, they will look at companies that have real solid assets, assets that are actually worth money.

As his investment philosophy changed, with the influence of Charlie Munger and Phillip Fisher, Warren Buffett started looking at companies with durable competitive advantages. The duo of Warren Buffett and Charlie Munger prefers to look at companies that they can understand, companies which they deemed are in their circle of competence.

The duo are famously known to not be affected by daily market price movements and both are amazing in their knowledge of how business works.

Here is their wisdom of how money is no longer needed to make money.

A Changing World

From the video, we can see or rather hear that, due to the changing world, companies operates differently now and the required reinvestment of capital into the business has decreased. As a matter of fact, the top 5 companies by market capitalisation has changed drastically from the  first decade to the current decade.

As of 2019, Warren Buffett will be 89 and Charlie Munger will be 95. With a combined age closed to Jonathan, it is not surprising that both of them lived in the world of Alexander Graham Bell.

Their lifestyles may have stagnated from their era, however, their insights has not. As explained by Warren Buffett, the nature of capitalism has changed and that companies are required to reinvest plenty of capital in their operations now have the luxury of not doing so, and it will still work for them.

This has resulted in a huge shift of power and wealth. With what is previously the rarity becoming the norm, in order for us to profit from the market, we need to recognise the shift as well.

With the emergence of the 4th Industrial Revolution, it is really exciting to see how the world will change in future. And when that happen, you wouldn’t want to be left behind and we would certainly want to catch the progress and profit from it. To know how to do that, take a look at our Skillsfuture-claimable stock investment course where we cover topics on which stocks to buy and how to profit from with little capital. And I guarantee you, we do not use leverage.

To know how to safely increase your bank account by 10-fold, you can read our book, “How to Grow Your Elephant“, which will cover topics that you need to take care of before you start investing.

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