What is Investment?
Investment is vital for customers, corporations and even governments; it is a strategy of planning to maximize income. Most large corporations reforecast their investment on a quarterly basis. Like consumers, governments also have to utilize and pay for the things they want or need. Having a budget or an investment plan is essential because it can help people and governments achieve prosperity.
When Forbes recently released a list of the wealthiest people on the planet, their personalities were carefully studied and the results wrinkled the eyebrows of many. The majority of the wealthiest people had one common characteristic: they were all investors and budget planners. Tai Lopez, a mentor of entrepreneurs, points out that true money is created within the economy if people start to see things from an investor’s standpoint. The largest category of the 450 self-made billionaires in the world, were not in the sectors of the real estate, oil, media, nor in the food industries. Rather, what made 77 percent of the billionaires: investments. On a national level, even countries with no natural resources can manage to accumulate wealth through investment.
Investment in Kuwait
Invest in the petroleum sector: By removing plastic bags from supermarkets, money can be saved for the development of Kuwait’s economy. Plastic bags are made from crude oil and natural gas – both nonrenewable energy sources, meaning they are in limited supply. Not to mention the pollution created by plastic bags on land and sea. In many supermarkets around the world, shoppers must bring their own reusable bags to cut down on unnecessary waste and pollution of plastic bags. This approach could have a real impact on Kuwait’s petroleum base and free up money and resources for investment.
How investors think?
High in value but low in price:
Avenues Mall: According to Few Lessons for Investors and Managers, Peter Bevelin highlights that the value of something does not determine its price. Two of my friends and I went shopping the other day to the Avenues mall. Abdulrahman, a good friend of mine, paid KD 150 for a Louis Vuitton wallet. Yousif had a different approach. He went to H&M and bought a wallet for only KD 15. When both of them laid their new wallets down on the table, I could hardly tell them apart. Both wallets were brown and a zipper made them look similar. When the value of two things are scandalously equivalent, but with distinct prices, buy the one with the lower price even if you can afford the more expensive. Brand names mean nothing once the value of two objects is the same. This is investment.
Buying used stuff:
Hawaly: The latest iPhone 6 was just released from Apple. But have you ever thought of buying it used with 50 percent off? Why buy a brand new iPhone when you can buy a used one? Not only it is still in good quality but you can save as much as 50 percent! You will find plenty of used iPhones, laptops, and printers across Ibn Khaldon Street in Hawally. Buying used stuff, such as used cars or other phones is a technique in the hands of investors.
The next time you ever think about buying something, think logically, think mathematically, if the greatest mathematician was alive, he would have surely shook my hands for my invention of this inequality:
value > price not price < value.
Whenever you go shopping remember this principle: the price of the object must be lower than the value. This is the secret of investment and budget planning.
Investment and Budget planning:
Having an investment or a budget plan is very helpful. With it you can estimate your income, your planned expenses, your planned savings over a certain period of time and even maximize your income. A good record of saving also helps people set priorities for spending. To plan for your budget here are seven steps from the economic experts of Glencoe to help:
* Step 1: Set Your Financial Goals: What do I want to accomplish in the next year? The next month? Are my goals realistic and practical? An investment plan can help you determine which goals you can meet.
* Step 2: Approximate Your Income: Include all your sources of income. Start by recording your estimated income for the next month.
* Step 3: Invest for Unexpected Expenses and Saving: You have to plan for expenses such as food, rent and clothing to satisfy your basic needs. You must also plan for unexpected medical visits or accidents. Luckily, if you are a Kuwaiti citizen your government provides free health care. But you should plan for your expenses to include rises in costs of certain things, such as gasoline.
* Step 4: Save for Fixed Expenses: Those include expenses that are fixed and regularly paid such as rent, a car loan or insurance.
* Step 5: Budget for Variable Expenses: Some expenses change from time to time and can be controlled easily. They include eating out, certain goods, phones charges and entertainment. The amount of these expensive vary from month to month
* Step 6: Record what you spend: There are many great apps now available to help record your budget. Knowing where your money goes each month will help you learn to spend more wisely and save accordingly.
* Step 7: Review Spending and Saving Patterns: Investing is a continuous process therefore, review your budget each month.
Al-Mutawa is a student at the American University of Kuwait.
By Khaled Al-Mutawa