I know that the route to becoming financially independent is not simple.  If it was, everyone would strive for it!

In order to become an investor, I need some capital.  It is possible to invest with nothing down, but such deals take a lot of skill to negotiate.  It is my view that these skills become developed as you learn to invest.  That means for the beginning investor it is quite difficult to find zero down deals – whether using Paper Assets or Real Estate.

I have mentioned my musical instrument business here before.  I basically buy old instruments, have them repaired, and sell them on at a higher price.  Typically the margins are very high.  For example, last week I spent $150 on a Yamaha saxophone.  It needs about $100 of work and is currently in the music shop awaiting repairs.  Once the repairs have been completed the instrument will sell for $950 at the store.  The store gets 20% commission ($190) and the $100 for repairs.  That leaves me with $660 and a profit of $510.  Not a bad return on $150!  It should also be sold by the end of September.  So it is a pretty good investment.

However I wonder if this really counts as an investment.  For sure it beats any of the interest rates around.  The returns are also pretty consistent.  The instruments do increase in value once they have been repaired.  BUT, I still feel like a trader.  At the end of the day I am buying something at one price, adding value to it, then selling it on for profit.  That is what a trader does.  If I do not go and buy more instruments, I cannot generate more money.  In other words, this is not a passive income!

Under Robert Kiyosaki’s definition, the instruments are not an asset.  They do not put money in my pocket every month.  The money comes to me once the instrument sells, but it does not generate income up until that time.

So where do I go from here?

My current plan is to continue buying the instruments, then consigning them at the store.  That way I only need to spend time buying them, not repairing or selling them.  The funds I receive from this I can re-invest or save.  After a few years I will have a $10-20,000 to invest in assets that produce passive income.  I expect to do this through real estate partnerships.  In the meantime I will keep trading.  I will also look for other items I can trade…I really would prefer to trade items that have a higher profit per sale.  It is all well and good tripling my money on flutes, clarinets and saxophones, but at the end of the day a typical sale generates $100-$250.  What if my profit in a sale was closer to $1000.  Or could I find something to trade on a regular basis that would earn me $3000 in profit?

The greater the profit I can make, the sooner I can begin investing properly!!!