It’s not just a catch of real estates, this applies to all assets which a person wishes to acquire. One thing that must be always considered is, what would be the real value or income-generating nature of this asset in the future?
If you live in Accra and you are able to purchase a small piece of land at Cantonments, Ridge, Spintex, Labone, East Legon or the Airport areas, you are likely to derive huge returns from this land in the long-term, compared to someone buying a piece of land at Amasaman. Of course, the purchasing price of these two lands will be far different but for investment or asset appreciating purposes, the one who struggles or manages to purchase land at a prime area will receive the greatest return in the long-run.
I have recently been looking at shares—as I intend to heavily start investing in this sector. And the above knowledge hovers around in this department too. It’s not the value of the shares today that really matters, but the future value if held on.
So, someone can own 200 shares in company A, and another can own 200 shares in company B. Even if they were all purchased at the same time and at the same price, if in 10 years’ time company B’s share price increases by 20, and that of A increases by 3, it’s the purchaser of company B’s shares who will be receiving a greater return on investment.
It’s important that we do not just think about today. Even in our quest to satisfy today’s need such as seeking to provide a roof over our heads, we should also consider the future value of what we are acquiring, even if it is to meet our immediate needs.
A land or a house may be cheap today. That does not mean you should just acquire it. Today’s price should not always be the ultimate determinant of which asset we purchase. We should also consider the possible future value, and the sort of capital gains we can derive even as a by-product of the actual purpose of acquisition.