Does money grow on trees?
Years ago, I worked with someone who brought a small money tree into his office. While he didn’t actually believe in the money-making power of the plant every now and then he would give it a rub for good luck. I was recently in an office for a meeting and there was a money tree. I needed to know the background of why people attribute money-making prowess to the bush, so I went to Google to find out.
According to Easterleaf.com, “The Money Tree (Pachira aquatica) is a plant that has many legends and beliefs originating from China. A legendary tale floats around of a very poor farmer who was very down on his luck and spirit. One day, he found a very curious looking plant with braided trunks. Upon inspecting the plant, he found the plant to be very hardy and resilient, and took this as a lesson that he as well should learn to be resilient and strong. From the seed of this miraculous plant, he grew more of them and sold them. Today, money tree plants are very commonly found in homes and offices because of their ability to survive with minimal care. The money tree plant is also highly idolized by those who practice feng shui because they commonly sprout five leaves on a stem. Five is an important number in feng shui because it is believed that everything within the universe is made up of five distinct elements: water, wood, fire, earth and metal. It is believed that if you place a money tree plant in an area that is exposed to areas concerning money, the money tree plant will bring the owner good luck and fortune.”
Profit from exotic fruit?
Apparently I can’t escape botany, because as luck would have it I spoke with someone last week who had just received an inheritance and wanted my advice on investing in a private company that grows garlic in China, Aquilaria trees in Indonesia and a host of other exotic fruits and vegetables. I said that I know nothing of this but if he wants to keep the inheritance he should invest in stocks, bonds and real estate. Why make it so complicated, I asked? He said he heard that he will get 20% a year on his investment. I politely said that this isn’t the kind of investment I deal with and that he should look somewhere else.
There is a certain irony in the concept of the money tree. Money trees are popular because you don’t need to do any work to take care of them. It’s sort of the opposite of how to actually grow your money. The way to make money is too work hard, live within your means, save and invest. There are no shortcuts.
Smell a rat
But, you may ask, there are investments that yield 20% a year, maybe even they are guaranteed. How would you know if it’s a scam or not? The first rule is always: buyer, beware. If something sounds too good to be true, it probably is. The second rule is to read the fine print carefully. Oftentimes the small print on the bottom of the investment fact-sheet makes it very clear that the “guarantee” comes with many strings attached, and there is a reasonable chance that you can indeed lose some or all of your money. The third rule is to always ask detailed questions, and never let the salesman off the hook. Ask pointed and specific questions to get a better understanding of the investment. Always inquire if there are any risks, and what they entail. If the answer is, “there are no risks,” or lip service is paid to explaining the risks, there is a good chance that you are not getting the full information about the investment, and you should think twice about investing.
Long Term
In reality, it is virtually unheard of for a person to accumulate wealth overnight. Rather, it’s a process that takes many, many years. If you are looking to build wealth for the long term, you should start saving and investing as soon and as often as possible. Define your goals and your needs, and create an investment plan which will enable you to achieve whatever it is that you are trying to accomplish financially.
Just remember that growing wealth is like taking care of a garden. With a lot of work and nurturing you can enjoy the fruits long into the future.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.gpsinvestor.com or email aaron@lighthousecapital.co.il.