Legendary investor, Warren Buffett defines investing as "…the process of laying out money now to receive more money in the future." Investing is the act of allocating resources to an endeavor with an expectation of obtaining a greater value. Many group key investment opportunities into four quadrants; business, commodities, real estate and paper assets. Our topic of discussion for today is “paper assets”.
A paper asset is a representation of something. Paper assets are pieces of paper that define ownership of an asset. Classic examples of paper assets are stocks, currencies, bonds, money market accounts, and similar types of investments. For paper assets to have a tangible value, there must be a working financial system to back them up and exchange them. Many people are shocked by the fact that the U.S. dollar is also a paper asset, as are all Fiat currencies in the world.
Investing in paper assets is easy and could be done by any individual. Owning a fiat currency is already an investment in paper assets. Like investing in any other thing, the first thing you need to do is the learn about paper assets; the terminologies, the risk, the cons and pros, and the profitability.
I read an article earlier this week about a lady who took the challenge of learning about paper assets and became an expert investor. The lady used to survive by selling milk and candles, and collecting interest from deposits, but when interest rates started going down, Sister Lioba realized she needed a new strategy to keep her from going under.
Today, she runs a portfolio of €2 million, or $2.1 million, from her convent office. The amazing thing is, she learned how to do it all by herself."I started by googling what a swap is," Sister Lioba says, referring to a derivative that allows an investor to exchange the income stream of one asset with that of another. The 54-year-old then began studying the financial pages of German newspapers and her bank's research notes. "I now understand every third sentence instead every 10th when I started," she says.
Sister Lioba doesn't have a background in finance. In fact, she studied psychology and served as a trauma psychologist. She started her journey into paper assets by purchasing a share in one stock and teaching herself to understand the financial jargon.
I was so inspired by Sister Lioba's story of how she taught herself about investing and was able to increase her income.
From our next article on investments, we would be discussing further on how to invest in paper assets.