The Foundation To Investing


When a bamboo seed is planted, it requires water, fertile soil, and sunshine, but even with these ideal conditions, the bamboo tree does not sprout immediately. There is no visible growth above ground for the first four years. It’s not until the fifth year does the bamboo tree truly take form – growing up to 80 feet in just six weeks.

When people think of bamboo, they think of pandas eating it for food. But, what many people don’t know is that certain varieties of bamboo are extremely useful in the construction of both commercial as well as residential structures. Known for its strength and relatively low cost compared to other building materials, bamboo is frequently used worldwide as studs, beams, rafters, and scaffolding for constructing commercial buildings and homes – making it a commercially viable commodity.

The seeding, nurturing, and cultivating of bamboo is an allegory for investing – specifically long-term investing. There is no immediate payoff, but long-term investing – like bamboo cultivating – can yield significant results with patience and perseverance. A long investment window and commitment are the keys to building and sustaining wealth.

For sophisticated investors who have achieved the type of financial independence everyone seeks, speculation is not part of their vocabulary. Think about it this way. Are you the type of person that would rather trudge through an uncharted forest in hopes of stumbling on a mythical forest of 200 ft. bamboo trees, or would you rather follow a tried and true formula used by past successful growers to grow 80 ft. trees?

​​Smart investors choose the latter. Instead of chasing rainbows or the next big thing in hopes of striking it rich, smart investors stick to slow and steady. While other investors follow the herd and buy into the hype to jump from one fad investment to another, savvy investors stick to tried and true investments.

Patience and perseverance are key to wealth. Success may not come immediately, but it will come. Just like the bamboo tree, long-term investors may not see immediate returns. Still, they can achieve significant growth with consistent care and attention to their investment strategy.

There’s something else investors can take away from bamboo trees and smart investors. The key to wealth is passive income and generating multiple streams of passive income.

​​Ultra-high-net-worth investors (UHNWIs) have no interest in reinventing the wheel. Why go through the trouble of learning the ins and outs of growing bamboo trees when you can just partner with growers who already have years of experience under their belts? They already know the types of climates, locales, soil, and other factors optimum for growing bamboo, so why not just partner with these experts and enjoy the fruits of someone else’s labor in exchange for a capital investment?

UHNWIs leverage the expertise of others to not only generate passive income but to generate multiple streams of passive income to velocitize wealth. Cash flow from the sale of bamboo to developers and builders can be reinvested to acquire additional land to increase production and volume. This is how the wealthy grow and maintain wealth. They partner with experts, so they don’t have to reinvent the wheel, and they partner with multiple experts to generate multiple streams of passive income.

​​Can you see how this strategy can lead to wealth exhibiting an exponential growth curve instead of straight-line growth?

Leveraging the expertise of others affords another advantage to investors willing to play the long game: diversification. Partnering with multiple bamboo growers across multiple geographic locations (i.e., Asia, South America, Australia, and Africa) and different bamboo varieties has the benefit of insulating cash flow and appreciation.

​​If there’s a disaster or downturn in one particular region, investments in the other locations and segments can pick up the slack. Smart investors do the same thing when investing in private companies. They invest with private companies across multiple geographic locations and market segments to insulate income and growth. The continued income and growth in other markets can balance downturns in any particular market.

The key to wealth is passive income and generating multiple streams of it.

​​You won’t find the types of assets ideal for generating passive income essential for building wealth with traditional assets or in the public markets. Instead, you’ll find them in the private markets where investing in private companies typically require long lockup periods.

​​Like the bamboo tree, an initial investment in these long-term assets won’t bear immediate results. However, it will lay a strong foundation for significant future results, which can be reinvested to grow the wealth-building machine.

​​This type of long-term investment strategy has a foundation in tangible assets and a diverse portfolio that avoids speculation and high-risk investments. It has been a tried and true formula used by the wealthy for years to achieve financial independence.

​​This strategy sets investors up for long-term success and significant growth, just like in the bamboo tree example.