Dumb Money and The Importance of Real Assets

Dumb Money?
Forgive me for calling money dumb, but not all dollars are created equally.

What am I talking about?

Investing Without Fundamentals
What I mean is even though each dollar is worth the same, how it is earned from “investing” can be very different with varying levels of risk and stability.

Let me explain.

Just because someone made a lot of money at a casino does not make her an intelligent investor. Winning the lottery, while an amazing achievement against odds, is unlikely and I am sure that amount of money some people pay annually for those odds my not make sense. Buying a stock because your friend told you, and happening to do well is pretty awesome, but did not involve fundamentals to allow for repeated success, maybe just the hope of repeated luck.

Entertainment and Distraction
Furthermore, whereas in developing countries, people tend to focus less on the luxuries, in the developed world whole industries are created on human’s distraction and desire for escapes. Social media is a way of life, and new technology companies and products are constantly emerging with new ways to keep us distracted and on their platforms. Many come and go. Some catch on well and are eventually replaced by the next distraction platform. New “celebrities” are created over night (literally) with the magnetism of their weird or unusual content. And they are making big dollars. This is where I may lose you, but I call this dumb money.

Basic Human Needs
It is great for these creative individuals and organizations to generate gobs of dollars for their creative content, but if you step back for a second and think about it – using this pandemic as an example: people are losing jobs, some people are very sick, many are beginning to think about basic needs and important life considerations – it really gets you thinking about the lesser attractive (but highly important) needs of people.

The Importance of Real Assets
Unlike a YouTube channel whose value is derived from entertainment, people need a place to live (always) and technology will never replace that. Regardless of the state of the economy, people will always need to live under a roof and until there is some development that alters this basic human need, it will not change. If you are not a risk taker, I have great news for you: real assets are basic and highly important investments.

While new technology and big industries entertain (very lucratively) people, those humans all need a place to live. The internet is infinite and new technology can always be created, but more land on this small earth cannot. More houses and multi-family assets in certain cities are very difficult to create. With the growing world population, real estate continues to be a growing need. Real assets, while possibly not as attractive as watching your stocks every moment on your Robinhood app, are here to stay and remain critical needs. Real assets are called so because that can be touched – and lived in.

Dumb money has its place. If you are very good with technology and understand the trends, you too can capitalize on these great opportunities to create wealth based on the hottest new distraction. After all, it is real money. But for those who want to keep it simple, and perhaps safer, while supporting the most basic of human needs, you can always do well with real assets.

Learn to Invest
Of course buying right with a solid understanding of fundamentals is key. This blog is a great way to learn something new every week to help your wealth-building journey. Learn the mindset that helps you get started in real estate and why I believe everyone should have real estate in their wealth portfolio. Get educated on the wealth-creation possibilities of real estate, and learn the strategies , whether active or passive investing, that work best for you.

Rodney Robinson II
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Author: Rodney