When it comes to making profit from investments, there is no asset class that is inherently good or bad. What matters is the person, the strategy, the timing, the execution, and the discipline behind it.
There are people who have made millions in the stock market, and there are others who have lost millions in the very same market.
There are people who have built enormous wealth through real estate, while others have seen years of savings wiped out by poor location choices, excessive leverage, or unrealistic expectations
There are people who have created substantial passive income portfolios through bonds and fixed-income investments, while others have dismissed them as “low-return” assets because their focus is only on growth while ignoring perhaps the value of stability, preservation, and predictable cash flows.
This I’ve seen a lot while consulting with those in high turnover businesses. They are used to cash moving in and out so much that having Sh1million in bonds is “making money idle” according to them, even if the businesses aren’t making them anything.
There are people who are entrepreneurs and have built thriving businesses worth millions, and there are many whose businesses consumed capital, time, and energy without generating sustainable returns for them.
There are founders who have struck gold with startups, and there are countless others who have watched promising ideas fail despite significant investment.
There are people who are farmers and agribusiness investors who have built fortunes from the land, while others have suffered losses due to weather, disease, market fluctuations, poor planning, or operational challenges
There are professionals who are quietly building wealth through disciplined saving and investing while employed, and there are others earning high salaries yet struggling financially month after month.
My point is; there are several different dynamics to all asset classes that affect profits and losses.
Wealth is not created by an asset class.
Wealth is created by understanding the dynamics of an asset class and managing them well.
Rhina Namsia: What is wrong with being in the Middle Class in Kenya?
Every investment comes with its own set of risks, opportunities, cycles, skill requirements, capital needs, liquidity characteristics, and behavioral challenges. What works exceptionally well for one person may be completely unsuitable for another.
Investment conversations should move away from statements such as “Real estate is the best investment, Stocks are too risky, Bonds don’t make you enough money, Business is the only way to become wealthy, Employment can never make you rich, etc.”
Such statements oversimplify a much more complex reality.
A better question for anyone should be, “do I understand the risks, rewards, and success factors of this particular investment well enough to participate in it successfully?”
The highest returns often don’t come from chasing the best asset class but from finding the asset classes that align with your knowledge, temperament, capital base, goals, and ability to stay invested through difficult periods.
Many investors spend their lives searching for the perfect investment while overlooking the more important task of becoming a better investor.
At the end of the day, the same market that creates millionaires also creates losses. The difference is rarely the asset itself but the decisions made before, during, and after the investment.
Rhina Namsia is the founder and chief executive officer of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory.
