Posted by Editor's note: "What is a good financial investment? Which financial investment is the most cost-effective?", this isAmerican Life InsuranceGuide to the questions often faced by brokers and wealth management practitioners in the community.Mr. Wu Zhijian, the CEO of Woodsford Capita, Singapore, shared his story.
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A few months ago, a very good friend called me and asked me to give him an idea.He is an executive of a clean energy company with an annual salary of more than one million.
The thing is like this.The chairman of their company invested in another project at that time.The project is a high-tech industry and is favored by many people.The big names in the domestic private equity industry, such as Mr. Shen from Red S Capital and Mr. Zhang from High L Capital, have all voted.The chairman told my friend, if you want to vote, you can also let you participate.The minimum investment for each person is $20.This investment opportunity has been closed to the outside world and is only open to internal senior management members.
My friend asked me: Should I vote?
I asked him: Approximately how many years will this project go on the market, and where will it go on the market?
Friend: I don't know where to go public. It is said that there will be an IPO in 5 years.
Me: Have you ever read the earnings report?What is the financial status of the project?Future expectations?
Friend: There is no profit yet.The financial data is pitiful, but the current valuation is very high, close to 50 billion yuan.
Me: Then how do you value this project?
Friend: I can't estimate it. The main reason is that the big guys have the final say. The big guys eat meat and we drink soup.
Me: Investment terms (Term)?Such as fees, lock-up period, rights and obligations of GP/LP?
Friend: I don’t know how much it will cost. Funds must be locked for at least 5 years.
Me: Under perfect conditions, how much money can be made from the project?How much is the worst-case loss?
Friend: I haven't really thought about it.In a good situation, it may increase by 10 times. In a bad situation, it will lose money.
I asked my friend, this kind of investment opportunity looks like buying a lottery ticket, why are you still investing? 20 US dollars, say more is not too much, say less is a lot.
Friend: In case this project is really finished, if I didn't invest, didn't I miss a windfall?And the big names in the private equity industry have also voted. I trust their judgment.
To give you an example, I just want to tell you that, many times, many people’s investment ideas, including those executives with an annual salary of one million,It was made with a strong speculative nature when the information was completely asymmetric.
Like my friend’s example, I don’t know anything about the project’s financial data, and I’m not very familiar with that industry. Naturally, valuation and risk assessment are out of the question.I don’t know the terms and costs of the investment. The main reasons for supporting his investment are "the big guys also invested" and "after this village, there will be no such shop."So in essence, such an "investment" is actually a fight with your eyes closed.If you are lucky, you may change 20 to 200 million (after the company goes public).But if you are unlucky, if you don't have a blog, the worst result may be loss of money.
I asked my friend, if you look back at your life experience over the past few decades, how did you make your money?Which investment has the best return?
My friend thought for a while and said: Let’s tell you, from an investment perspective,Two of the best rewards: a salary increase through job-hopping, and the two houses I bought in Changning District, Shanghai.
In fact, for most people, the truth is not the same:Investing in anything is not as cost-effective as investing in yourself.In the end, the most valuable is actually the professional skills and labor provided by oneself.If you want to accumulate wealth, you can buy two houses and hold them for a long time if you can.
As for the "windfall" that earns 5 times in 10 years, it is hard to find.The so-called small gambling, if it doesn't hurt your family's financial situation even if you lose, then you might as well try it.But if you expect to make a fortune by relying on such an opportunity, you are likely to be disappointed.
I hope to be helpful.
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