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Business-Powered Investing

The best investments start with knowing how business works

When I was around twelve years old, I became aware of the power of investing. I was walking along the beach with my rich dad and his son, Mike, and he was showing us the piece of land that he had just purchased.

Although I was only 12 years old, I knew that it was very expensive to buy beachfront property. I realized that my rich dad had just purchased one of the most valuable pieces of land in our city.

My first thought was, “How can Mike’s dad afford this?”

As I stood on that beachfront property, the waves washing over my feet, I was in awe that my friend’s dad, a man the same age as my dad, could afford something like this—something my dad could never afford.

It was that day that I learned the power of the word “investing.”

The questions remain the same

Today, decades later, I now have people asking me many of the same questions I began asking that day.

In the investment classes I teach, people ask me things like:

  • “How can I invest when I don’t have any money?”
  • “I have $10,000 to invest. What would you recommend I invest in?”
  • “Do you recommend investing in real estate, mutual funds, or stocks?”
  • “Can I buy real estate or stocks without any money?”
  • “Doesn’t take money to make money?”
  • “Isn’t investing risky?”
  • “How do you get such high returns with low risk?”
  • “Can I invest with you?”

The power of investing

People understand the power found in the word investing, and many want to enjoy that power for themselves.

Yet, many people are also afraid of this power and stay away from it, and many even fall victim to it.

Instead of running from the power, or condemning it by saying such things as, “The rich exploit the poor,” or “Investing is risky,” or “I’m not interested in becoming rich,” I became curious.

It was my curiosity and my desire to acquire the power found in investing that set me on a lifelong path of inquiry and learning about investing.

“How can you afford this?”

Standing on that beach with my rich dad many decades ago, I finally worked up the courage to ask him, “How can you afford this?” Rich dad gave me an answer I never forgot. Putting his arm around me, we began walking along the water line, and he said, “I can’t afford to buy this land, but my business can.” My investor lesson had begun.

The business of investing

Many years ago, I taught a three-day class on investing in Sydney, Australia. The first day and a half I discussed the ins and outs of building a business. Finally, in frustration, a participant raised his hand and asked, “I came to learn about investing! Why are you focusing so much time on business?”

I gave the man two reasons in response.

1. We ultimately invest in business. If you invest in stocks, you invest in business. If you buy a piece of real estate, such as an apartment building, that is a business. If you buy a bond, you’re investing in a business.

Logically, it follows that if you want to be a good investor, you first need to be good at and understand business.

2. The best way to invest is to have your business buy your investments. The worst way to invest is as an individual. The most successful investors in the world buy their investments through their businesses, and the really successful ones create investments through their businesses that others want to purchase.

This, of course, is a much different way of thinking about investing, which is why the man in Australia had such a hard time with it initially. But it is the type of thinking that separates the very successful investors from the simply average investors.

I encourage you to learn more about starting and running businesses to help power your investing. Rich dad advisor, Garrett Sutton, has written a series of books to help you do just that, Writing Winning Business Plans , Start Your Own Corporation , and Run Your Own Corporation .

Original publish date: March 04, 2014