I drew the curtain open this season by entering an unkempt dark room disorganized with furniture (to review last post, click HERE). I was looking for a key; a key that would open the door to leverage investment which automatically increases the number of financially independent Nigerian. My belief is premised on the fact that if there are more financial independent Nigerians, there would be a huge progression in the economy of Nigeria as a whole therefore leading to a better life (if not for us, for our children). The issue with Nigeria is not the corrupt leaders because the leaders definitely did not fall from the sky since the leaders are product of the society. If the leaders are termed “corrupt”, then we are definitely corrupt. If the aforementioned argument does not go down with you, then look at it this way; the only reason a man will enter a position of leadership and loots almost everything is because is mentality is on the Maslow’s Physiological statement. He/her primal instincts read survival which describe majority of Nigerian Youths.
There may be another argument about the minority being good which I vehemently disagree. Let’s go back to my story of the dark room where I got my hand stuck to a nail (wow! Very painful). All I needed to do to avoid getting hurt was to put on the light. Okay suppose there was no light in the room just like the Nigerian situation where the country lacks basic infrastructure to achieve our aim, I could buy a candle to lighten the room. This simply means no matter how little the light in the room was, I would definitely avoid getting hurt. This is the reason I don’t buy the minority good ambassador because as long as they are not putting on the little light they have, everybody that enters the dark room would get hurt. The silent attitude of the minority good is worse than the unscrupulous action of the bad because the bad is definitely ignorant while the good has a modicum of light; no matter how dark the room is, a little light would make a huge difference. There is no competition between light and darkness, when there is light, darkness gives way. This is why Nigeria is not a dark room because majority of the populace are in the dark; Nigeria is a dark room because there is absence of light.
Now going back to finding the key; even if I put on the light, the room is in disarray. I definitely cannot find the key in a disorganized room filled with broken furniture. The first step is to arrange the room, then sweep it. By doing these activities, the key would definitely show up. The steps are very critical to finding the key; in business, organizing the room is called planning and strategy. It is getting a vision and a mission to get the vision, aligning the values to properly win. In investment especially leverage investment, it imperative you understand the true meaning of assets and liabilities. A true understanding of assets and liabilities is what truly separates the 10% of the populace who are wealthy from 90% of the survival mentality populace. There has been a misrepresentation of the definition by so many financial actors from accountants to bankers. This misrepresentation has caused more harm than good; it is a very convenient way of making people stuck on the rat race. The accountants who are suppose to be experts in defining the meaning of assets and liabilities are by themselves handicapped with the traditional model.
A true story; Olu Maintain of the “Yahozee” fame was spotted in the car space of my former office in a Cadillac Escalade which definitely caused an up roar of discussions. One of the accountants in my office, who has a degree in accounting and a CPA to cap it, raised his voice saying that Olu Maintain was not smart. Before I could question his line of reasoning, he said what I believe 99% of the people in the office affirmed to, “How can he buy an Escalade in Nigeria? It’s surely a liability; no spare parts to replace outdated one, high fuel consumption, etc. The word that really got me thinking was the liability he mentioned; how can a degree accountant holder not know the meaning of liability? Then I had a second thought; maybe I was wrong so I started analyzing the situation to see if the Cadillac Escalade was a liability as he poignantly voiced out.
The period Olu Maintain was driving such car was November, 2007; he could have borrowed it but suppose he bought it; it’s most likely to be a first rate used car which would go for like 4.5 million naira (with a good bargain) and a new model of the car cannot be more than 7.5 million naira. These amounts mentioned were not too much for him knowing his Yahozee video was more than 1 million naira. Now what was he trying to achieve by driving such a car? He wanted people to keep talking about him; his music was doing well; the more you talk about him, the more you want to listen to his music. This stunt increases his record sales and most of all increases his invitation to shows and the December end of year party. The stunt has also raised his standard; my former company pays artist 250K for a night show but Olu Maintain would definitely command twice that amount with the stunt he pulled. As people talk about him, he would definitely be in high demand and would request for the amount that suits his perceived new status.
The Cadillac Escalade was surely a publicity stunt pulled by the record company which made Olu Maintain appear in almost all the high placed December shows. Now I am sure after the analysis you cannot call the Cadillac Escalade a liability, it is surely an asset that has given leverage to increase his return on investment. This surely lays the background for the definition of asset and liability. Asset is anything that gives leverage to your investment returns while liability is anything that negates your investment returns. Asset is not a particular thing like house, land, shares, investment vehicles, etc, it is anything that gives you leverage at a particular season of your life. You cannot put “asset and liability” in a box and stereotype the definition to some particular properties, you have to see it in relations to what it would produce in your life. Let me expatiate further;
A friend asked me if I have started building my house; well like he said and I quote “Dipo, I know you are a very smart guy, you must have started burying one house in Ajah”. I really did laugh at that statement because he said I was smart then he now qualified what a smart guy should be doing with his money. What made me laugh was his definition of smartness so in order to correct his impression, I said “a smart guy at my age with the money I have would not tie down his money in building a house; building a house to me is a liability at my age; the time I would use in building the house, I would have made 5 times my initial investment tied to the house. I would rather buy a house for leverage and sell it off if my taste change because my taste would definitely change with increased wealth.”
At this point in my life, building a house would surely be a liability (except I was an estate developer). It would surely disregard the time value of money and encourage the fear factor in me. Most people that run to build houses when they make a few bucks are doing it out of fear of their money running away. They do not see the house as leverage but as a shelter which is not bad if you are saving your money for the future. I have noticed that most people place their money in what they perceive as asset to save it not to invest it. I know so many people that have more than10 million naira worth of shares for the past 4 years and all they do is talk about it as if they are the smartest investors in the world. “Dipo, do you know the amount of First Bank Shares I have with bonuses and dividend every year?” I really do keep quiet because I hate bursting their bubbles by enlighten them that all they have done was save their money not invest it. Well saving is a kind of investment that’s why I choose the phrase “leverage investment” as a pointer to wealth and financial independence.
In arranging the lighted room of leverage investment, it is imperative that one arranges the dispersed furniture by understanding what they term as asset and liability in order to read the numbers. It is the numbers that determine the leverage. This season, we must learn to read the numbers not just place our monies in the hands of financial planners. Just like Robert Kiyosaki would say “it is not the investment that is risky, it is the investor who chooses to walk in the dark room filled with dispersed broken furniture. All investment vehicles have their secrets, if you obtain the key to open the door, your joy would be full. To obtain the key, you need to arrange the furniture; you need to identify the chair and table and place them appropriately. That is the same thing with asset and liability. You need to understand them and appropriate them accordingly.
And Jesus Christ said “But don’t begin until you count the cost. For who would begin construction of a building without first getting estimates and then checking to see if he has enough money to pay the bills? Otherwise, he may complete only the foundation before running out of funds. And then how everyone would laugh! “See that fellow there?” they would mock. He started that building and ran out of money before it was finished! The Living Bible Translation; Luke 14: 28-30.
