Fundamentals of Investing — Episode 4 — How to Invest in Assets

In Episode 3, we drew the line between assets and liabilities. We talked about what feeds you and what eats you.Now comes the question most personal finance articles quietly skip — okay, fine, but how do I actually buy these things?In this article, we’ll walk through how to actually invest in some of the assets we covered in Episode 3.Myth vs Reality “I Don’t Have That Kind of Money to Invest”This is one of the most common excuse people give for why they don’t invest. If you think this way then meet Mr. Ronald Read.Born in 1921, in a small farming town in Vermont, USA. He was the first in his family to finish high school. After serving in World War II, he spent 25 years pumping gas at a service station, then 17 more as a part-time janitor at a JC Penney department store. He drove a second-hand Toyota Yaris. He wore second-hand clothes. He cut his own firewood until his nineties. When Ronald Read died in 2014, his family discovered he had quietly built a portfolio worth roughly $8 million — across 95 different companies. A janitor. With no degree in finance. With a salary most people would call modest at best. Building eight million dollars by buying a few shares at a time, holding them for decades, and never panicking.“I am not so rich to invest”There’s an honest answer to this excuse. Warren Buffett calls it the Ovarian Lottery. The single biggest determinant of where you end up financially isn’t effort or intelligence — it’s where, when, and to whom you happened to be born. A boy born in rural parts to uneducated parents simply does not have access to the New York Stock Exchange while a boy born in New York does.So yes, your starting line is set partly by luck. Nobody chooses their birth. But with efforts and education, people can rewrite their fortunes. The lottery only sets the starting position. It doesn’t pick the finish line.Within whatever circumstance you find yourself in today, the question isn’t whether you have enough. The question is whether you start. Ronald Read started. With small amounts. For decades. And the math eventually did the rest.Now let’s talk about different asset classes and how to invest in them. 1. Cash in the Bank — The Most Misunderstood AssetFor some, the risk appetite is so low that they save their entire retirement fund as fixed deposits or cash in the bank. They work all their life to build a huge corpus, park it in the bank, and try to live off the interest during retirement.This worked until roughly the 1980s and 90s. Why? Because pensions were the cushion. Old-style defined-benefit pensions guaranteed a fixed monthly payout for life, regardless of what the markets did.That world is gone.Today, almost every pension system has shifted to market-linked products. The 401(k) in the US. The National Pension System (NPS) in India. The cushion you used to get from a guaranteed pension is now your responsibility.People still believe that living off cash in the bank is ultimately the safest plan. In reality — without that pension cushion, and with inflation chipping away every year — it’s one of the easiest ways to slowly lose your money.So is cash a bad asset?Absolutely not. Cash in the bank is the bullets in your investment gun. You cannot buy any asset without it. Every opportunity that ever shows up — a market crash, a property at the right price, an undervalued stock — requires cash on standby. Cash is also what speaks loudest when you negotiate the price of any real-world asset. Sellers move when buyers have ready money.Cash is essential, but cash alone is not a retirement plan.2. Bonds — A Step Up the Risk LadderA bond is just a loan you make. To a government, a company, or a bank. In return, they promise to pay you interest on a fixed schedule and return your principal at the end of the term.Bonds are slightly riskier than cash in the bank — but they reward you with meaningfully higher income, usually well above what your savings account or fixed deposit pays.The key concept here is the trade-off between safety and yield (yield is just the technical term for the interest you earn on a bond).Government bonds tend to be the safest. A government — especially a stable one — is unlikely to default on its own debt. Lower risk. Lower interest.Corporate bonds — bonds issued by private companies — pay higher interest. Why? Because companies can go bankrupt. The riskier the company, the higher the interest they have to offer to convince anyone to lend to them. So before investing in any private bond, the most important question is — how worthy is the borrower? Is the company healthy? Is the balance sheet strong? Are they rated highly by independent credit rating agencies?We’ll do a full deep dive on bonds in a future episode.3. Gold — The Ancient Hedge, Modern FormatWhen most people hear gold, they think of jewelry. But jewelry is a hybrid of asset and consumption — you pay for design, making charges, and emotional value. None of which you get back when you sell.If you want gold purely as an investment, two clean options:Gold ETFs (Exchange Traded Funds — a basket-style product traded on the stock exchange like a normal share) — buy gold the same way you’d buy a stock. No locker fees. No purity headaches. No making charges.Physical gold coins or bars — only if you genuinely want a small physical holding. Buy from a reputed bank or a verified dealer. Keep the receipts.4. Real Estate — The Asset That Eats You Until It Pays YouReal estate is the most emotional asset class on this list. It’s also the most common ovarian lottery one might win in their lives. It’s also the most illiquid, the most expensive to enter, and the one most likely to trap people in the gap between owning and actually profiting. Two paths exist.The traditional path — buy a property, rent it out, manage tenants, handle repairs, deal with vacancies. The returns can be excellent. The time tax is real. Don’t underestimate it. Remember, mortgage eats you until you finish the loan. The modern path — REITs (Real Estate Investment Trusts). Think of them as mutual funds for buildings. You buy units on the stock exchange, the trust owns a portfolio of commercial properties, and you receive a share of the rent as dividends.5. Intellectual Property and Owning a Business — The Two Paths to UnlimitedThere is a hard ceiling on how much you can save. There is no ceiling on how much you can earn. No matter how high your salary climbs, the maximum you can put away is whatever’s left after life takes its cut. IP and business break that ceiling — they are the only two asset classes on this list that open the gate to unlimited income. Every genuinely wealthy person you look at built their fortune through a business they owned or intellectual property they created — not through a high-paying job.Intellectual Property — write a book, build an online course, record a podcast, build a YouTube channel, patent a design. The investment isn’t money — it’s time, skill, and consistency. Most IP earns nothing. But the few that work compound beautifully. A book written once can sell for a decade.Owning a Business — roughly half of small businesses fail within five years. The ones that survive can outearn every other asset on this list combined. Both IP and business are build assets, not buy assets. They demand far more than money. But they are the only two doors on this list with no ceiling on the other side.What’s NextWe deliberately skipped one asset class — stocks. They deserve their own episode entirely. In Episode 5, we’ll do a deep dive into investing in stocks.DISCLAIMER: I am not a financial advisor. This is for educational purposes only. Always do your own research and speak with a certified financial professional before making investment decisions.Thanks for reading! This post is public so feel free to share it.This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber. Get full access to The Unlearned Investor at unlearnedinvestor.substack.com/subscribe