Sunday, 22 April 2018

Young adult thinking to start on investment.. with Rolex?

Recently, over dinner, I've been brought to attention when one of my colleague express interest towards investing.

Hence, being a curious listener and a little excited, I couldn't hold myself to ask more.
This is one of my first time seeing a young person in real who's interested in this topic and having goals.

Surprisingly, another fan of Robert Kiyosaki!

Rich Dad, Poor Dad - Robert Kiyosaki
We were chatting about some daily stuff before hearing this.. a house is a liability and we need to escape the rat race. This instantly rings a bell right in my head - Rich dad, poor dad.....

"I'm interested to get some investment before my savings is eroded by inflation and is looking to buy assets"

As a curious audience.. I asked: What type of asset are you looking to get? Property?

"Nah. Property is a waste of money. It's a liability"





Another fan of Robert Kiyosaki I thought.

"...I'm looking into getting a Rolex in 2 years time. I believe that they're a really good investment and milestone. I've read from a book that we must buy asset and not liability!"
I'm stunned for a moment




Upon hearing so.. I decided that I should remain silent and continue eating my noodles.

I believe that this fella here would have read the book - Rich Dad, Poor Dad, and have understood that there is 2 column in your balance sheet - Asset & Liability.

According to the book, an asset is something that puts money into your pocket while a liability is something that takes money of out it. 

And to get rich, one simply get more 'asset'!

Applying the actual definition to an asset, indeed, Rolex is a tangible asset and it does hold it's price well over the years.  One must not forget that Rolex is a luxury consumer goods and to keep it well running, you're requireed to send it in for servicing.

Aside that, you've to keep this 'asset' of yours in a good condition in order for you to cash out your 'profit' in the future! This servicing here will cost you money and it does not put money into your pocket.

Arguably, yes. The servicing you're looking at is your 'cost', and by selling it in the future, provided at a big gain, you will not be seeing anything out of this asset apart from the ticking hands. Any knock and dings while you're wearing it, will in fact take cents out from your pocket.

Throwing all this aside. Any seniors who bought a Rolex many many years ago at $1000 or 2000. May see that the same model now cost $10,000.

We must not forget that $1000 or 2000 back then is relatively 'big' too!
Hence, your purchasing power did not change!

Similarly to some who includes the value of your HDB in the list of your 'assets'!
For the duration that you're staying in it, this HDB does not put money into your pocket!
Probably.. unless you rent a room out.
 
Not forgetting our HDBs in Singapore has only 99 years of lease!

How now!?

To my friend above, it is pretty much a milestone in some sense that you've gotten your 'first luxury watch', 'I've earned my first 5 digits in my life' or probably a terrible way to say it is 'I've spent the first 5 digits I've earned in my life'.

Perspective is important.

As a human, I do love Rolex watches and would gladly get one in the future, as a luxury good to pamper myself.

Not an 'asset' in which I have to hope and pray for the value of it to go up in order for my gains to be 'realized'.

Another thing to remember about 'realizing your gains' is that, when you sells it in the future, this is marked as a pre-owned product, and the market here is different.

There's definietly some rare or limited Rolexes that will probably be a really good investment in due time.

As time is a very important factor in investing, there is no certainty in investment.
I know there's many who believes that Rolex is an investment.

I'm not an watch expert here.
But a Rolex to me. Is merely a watch.
As a person who love watches, I do have my weak spots too.
But, for now. A Rolex is definietly not for me :)

Nonetheless, if I happen to have one, I'm clear on what I expect from my Rolex.