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  • Writer's pictureChihiro Kurokawa

The best piece of financial advice I've ever received

Updated: Sep 26, 2020

You have to like making money more than you like spending or saving money.

It is not difficult to find wonderfully effective strategies on how to thrive while spending little money. Many of them can be found on Quora, on Reddit, blogs, YouTube, you name it - the answers are available, though that doesn't mean they are sought.

However I haven’t come across many suggestions on how to effectively deploy capital. Excess spending is bad, saving is good but understanding how to make money beyond active income at a traditional job is best. One has to understand that it is possible to make money in multiple ways that do not depend upon you showing up at a job.

Hence this advice isn’t tactical (“do this/do that”), but rather about the strategy (“this is how you should think”) one should employ if they’re concerned about their financial well-being.

1. I ask these two questions to help decide whether to spend. I severely limit spending on things that answer “no” to both of these questions.

a. Will this expense help my business?

b. Will it help me personally?

2. I am not a saver but rather an investor. Yes, I am very focused on limiting my spend but the purpose of it is not to save but rather to deploy capital into cash-flowing and/or appreciating assets, namely undervalued commercial real estate. I think of savers as people who sit on a bunch of cash. To wit, below are my net assets.

I save in order to invest; I think that holding cash is not a wise use of capital and thus my cash and cash-like assets are less than 5% of my assets. On a separate note, my debt-to-asset ratio is 19%. I’m continuing to work on reducing that but it’s not my priority to pay down low-rate debt when I can achieve a much higher return on capital elsewhere.

3. What do I do with the money that I don’t spend and that I don’t save as cash or in my retirement accounts? I invest it into my own and my colleagues’ real estate deals. The 37.7% above is diversified across four real estate deals in two asset classes, three markets and two US states, with different operators on each deal. Each deal has at least one operator with a strong track record over many years. On one deal we are the lenders so it has a lower risk profile than the equity ownership I have in the other three. Two out of those three are cash-flowing; the debt deal doesn’t cash flow, it’ll pay out when the term is up.

I’ve decided to invest in commercial real estate but there are other ways to make money. The point is that if you want to improve your financial health you should be obsessed with making money rather than saving or spending it. Find out how to make passive income or leverage your passion into something that makes money. Pick up a side gig that monetizes your love of art, video games, fashion or toys. Be creative, be resourceful, and learn continually in order to take control of your financial future because nobody else will.



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