There are millions of ways to invest, nearly everything around can be seen as an investment opportunity. Let your curiosity lead the way. When something catches your eye as a potential investment, consider the following steps to assess its viability:
- If you can identify a situation where you’re able to purchase an asset and sell it to someone else at a profit immediately, grab it. If not, ponder this: If the time comes when I need to sell, who would buy it?
- Every investment opportunity begins with a story. It’s these stories that draw in buyers. Is the story behind your asset compelling?
- Does the story encourage a continuous influx of new buyers? Can you see and track the flow of money and people?
- Is the asset a “store of interest”? Will it continue to captivate people’s interest, ensuring the story lives on? What makes it unique? Does it resonate with a lot of people? How sticky is it in the mind of people?
- Is the asset a “generator of value”? Can this interest be converted into ongoing cash flows? Can these cash flows potentially grow over time through network effects? Can they sustain the test of time and resist pressures that will naturally arise?
- If the asset is a potential store of interest and a generator of value, can you foresee any shifts in the landscape that could undermine your investment?
- To what extent will you truly own the asset? And how much will it cost you to acquire, store, and maintain it?
- Last but not least, have you checked the price? If it is not indicative of any excessive enthusiasm or profound lack of interest from investors, try to negotiate to ensure a margin of safety.
These eight questions make up my “universal” framework for assessing any investment opportunity, whether it’s physical or virtual, from the past or a piece of the future.
I hope it can make you a wiser investor too. I wish you all the best and look forward to seeing you in the investment world.