Dr Ajibola Awolowo
Aesop was a remarkable storyteller whose many tales passed invaluable lessons to its listeners. We can still learn from them today. He told the tale of the farmer who owned a goose that laid golden eggs. This farmer treasured the eggs and must have made a fortune by selling them. Out of greed and impatience, he killed the goose so as to harvest all its golden eggs at once. To his disappointment, the innards of the goose was just as that of every other goose. This single act led to profound regret and certain poverty for him. This farmer, unfortunately, was blind to the fact that his most valuable asset was the goose and not the golden eggs it so graciously laid.
It is easy for us to conclude that the farmer was foolish but are we any different from him today? Do we, as investors, recognise what our most valuable asset is? Hopefully, at the end of this treatise, we might be able to see things differently.
Investing involves delaying gratification today in a bid to buy assets which yield an income tomorrow. However, before you can raise the capital to invest, you need to earn an active income. You need to save some portion of it and deny yourself some privileges in the short term. You also need to choose which asset to deploy your savings into. You then need to patiently wait for your assets to yield an income. Lastly, you re-invest the income and compound your capital.
From this simplified account of the pathway to wealth, it can be clearly seen that you play a very key role in your individual journey. From earning the capital, to saving it, to allocating it to various assets and to reinvesting it. This leads me to conclude that you are your greatest asset!
We can be deceived that the companies, rental properties or bond portfolios we own are our greatest assets simply because they give us regular dividends, rental income and coupons respectively. If we believe this, we are no different from the farmer in Aesop’s fable. We have allowed the shiny allure of the golden egg distract us from our main asset.
If you start acting recklessly today and deviate from all the principles that helped you achieve all that you have, the depletion of your stockpile is sure. You are the main variable that holds everything together. Every decision and choice you have made in the past have led to this exact moment. Every decision you make from now onwards will determine if your goal of financial freedom is achieved or not.
Unlike the farmer that destroyed his greatest asset, how can we care for and cherish our most valuable asset? What should our responsibility to ourselves be?
First, we must not despise the means via which we were able to source the capital we used in buying various assets. For most of us, this will be our 9 to 5 jobs or businesses. These active sources of income provide the springboard that gives us freedom to pursue a passive income. They provide a stream of income that meets our needs while we patiently wait for the maturity of our investments.
Next, if we can increase our active income, we ideally would be able to save some more, invest more and compound our wealth faster. Commanding a higher wage may require you to get an additional qualification or attend a professional course. Getting that additional certification will cost you some money, time and effort but it may be the greatest act of self-love that you show to yourself.
Wealth is not built over years. It is built over decades. You need to be alive and well on the other side of this time to enjoy it. Eat healthy, live healthy and go for routine health checks with your health practitioner. There is an optimal amount of weight for your height. If you are overweight, you are more likely to have chronic health problems like high blood pressure and diabetes which can significantly affect your quality of life. I know you would rather spend your rental income or dividends on vacations and luxury cars rather than on medications or numerous blood tests.
The earlier you realised that you are in the driver’s seat of your financial future, the better you will be for it. Your attainment of wealth is dependent on the quality of the decisions you make today which in turn depends on the knowledge you have. The more you know about the world around you, the more likely you are to achieve wealth.
You owe it to yourself to learn about finance and accounting. This cannot be overemphasized. Companies communicate with investors through their financial statements and a basic understanding of accounting should be a prerequisite to individual investing. If you cannot understand a financial statement, you have no business investing your own money. Attend courses or watch YouTube videos that teach basic accounting. Always seek to improve on and consolidate your knowledge.
How many books about the stock market, investing, wealth building have you read? Just like wealth, knowledge compounds. With each new information you get, you add another layer to your knowledge base which will come in handy at some point in future. You may suddenly realise that some negative financial habits such as greed and fear of missing out (FOMO) which you may have struggled with in the past just do not seem to be an issue anymore. Subconsciously, you will find yourself acting right with minimal effort or thought.
The need to build a healthy knowledge base transcends just finance. The best investors are avid lifelong learners. Their interests span well beyond finance into seemingly totally unrelated areas such as Greek mythology, nuclear physics, evolution etc. These areas may seem totally unrelated to investing but they help to train your mind to be open and receptive of new ideas.
Charlie Munger calls this “Multidisciplinary thinking”. Whenever you are faced with a new problem, you will be able to draw from related and unrelated knowledge spanning the various disciplines you have exposed yourself to and come up with ingenious solutions.
I know I am a doctor and I have spent a good chunk of this article in a financial/ investment magazine talking about the need to mind our health. There is however a large correlation between health and wealth. We can work all we want, save all we can, invest in the best deals available and compound our passive income over decades but to enjoy this wealth, we need to be healthy and in the right state of mind.
You are your greatest asset. Feed your mind. Care for your body. Don’t kill the goose that lays the golden eggs in a bid to harvest all the eggs in one go. Build your wealth while being cognisant of the fact that ultimately, your health is your wealth.
Dr Ajibola Awolowo can be reached via this email: valuenigeriawithajibola@yahoo.com