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Real Estate Investments


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Liquidity is Enemy of Wealth Creation

Published in: Real Estate
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Real Estate Investments

  1. 1. Safety of my clients’ investment comes first, always and every time
  2. 2. My team member’s welfare and training comes next
  3. 3. My own ease and comfort comes last, always and every time
  4. 4. Real Estate Investments Olive Green Realty
  5. 5. Olive Green Realty LIQUIDITY IS Learning Objective OF WEALTH CREATION ENEMY No. 1
  6. 6. Olive Green Realty 1. What is Liquidity? a. Forms of Liquidity? b. Its Perils Understanding Liquidity 2. Insecurities – undefined emergencies 3. False sense of comfort – Lack of discipline
  7. 7. Olive Green Realty Time = Most Finite Resource Understanding Liquidity Successful people: • Are time illiquid a. Do not wait for events to happen b. Do not wait for structures to be provided c. Commit time • Schedule as much in advance as possible • Plan for contingencies by keeping some cushion • Do not have free time – even leisure time is scheduled • Borrow other people’s time (employees) to add to their time and productivity
  8. 8. Olive Green Realty Similarly, Understanding Liquidity Rich people: • Are cash illiquid (do not have liquid money) • Commit their money to: a. Assets – make their money work b. Long term compounding (by putting it to productive work) c. Borrow money (based on financial strength) to commit to assets
  9. 9. Olive Green Realty HIERARCHY OF LIQUIDITY Understanding Liquidity Cash in Hand Savings/Current Bank Accounts Fixed Deposits Liquid Mutual Funds Equity shares Mutual Funds Real Estate
  10. 10. Olive Green RealtyFinancial Insecurities Are you insecure about financial emergencies? What constitute these emergencies? • Death of primary bread earner • Medical emergencies in the family • Loss of employment / downsides in business
  11. 11. Olive Green RealtyFinancial Insecurities You can cater for these financial emergencies by: Taking a Term Plan with adequate life insurance to cover for life Taking a Family floater medical insurance to cover for health Maintaining cash reserves for 6-12 months in near liquid assets such as FDs /Liquid MFs to cater for loss of running income(s)
  12. 12. Olive Green RealtyFinancial Insecurities What cannot be labelled as Emergencies : Higher education expenses Schooling expenses Buying a vehicle Buying a home Taking foreign vacations
  13. 13. Olive Green RealtyWealth Creation How does one create Wealth? • Crave illiquidity • Commit money to wealth creation tasks such as: • Start a Recurring Deposit • Start a long term S.I.P • Start paying EMI of a home loan
  14. 14. Olive Green RealtyWealth Creation Illiquid Life : taking forward the analogy of time / successful people • Imagine a day that starts at 0700 and ends at 2300 • Imagine a week packed with such days • Imagine a month packed with such weeks • Image a year made up of such weeks • Imagine a decade made up of such packed years • Imagine 03 such decades
  15. 15. Olive Green RealtyWealth Creation What do you see? • An accomplished individual who : • Has achieved professional success • Is well respected • Is an authority in his/her chosen vocation • Is busy progressing /achieving, and has no time for negativity • Someone who : • Has worked very hard • Has denied self-comforts and/or relaxation • Has shown respect for time and not indulged in wasteful activities • Is used to pushing boundaries AND ALSO
  16. 16. Olive Green RealtyWealth Creation Financially Illiquid Life - Process Annual Term Insurance Premium (increased each year) Annual Health Insurance Premium (increased each year) Recurring Deposit (to cater for cash exigencies) Paid an SIP / EMI of starting home loan Paid an SIP / EMI of another home loan Paid an SIP / EMI of yet another home loan
  17. 17. Olive Green RealtyWealth Creation Financially Illiquid Life - Result • A financially well-off individual • A financially independent individual • A financially responsible individual • An individual who has grown from strength to strength • Someone who has for a long time : • Not indulged in splurging money • Used older / less fancy cars • Had not taken exotic holidays • Has been called conservative (bordering on miser) AND ALSO
  18. 18. Olive Green RealtyConclusion LIQUIDITY ILLIQUIDITY Poor Mindset Rich Mindset Indiscipline Discipline Irresponsible Responsible Immediate Gratification Delayed Gratification Short Term View Long Term View Wealth Destroyer Wealth Creator Feels Good Feels Bad for a Long time Comfort Zone Hard work - Discomfort
  19. 19. Safety of my clients’ investment comes first, always and every time Olive Green Realty