Chapter 95: Accumulate Assets and Stay Away from Debt

Li Feng checked the time and saw it was just two o'clock in the afternoon. He stood up, waved his hand, and said, "Xinyue, Menghan, let's go buy a car!"

"Buy a car? What brand?" Zhao Xinyue was delighted, her eyes curved into crescents with a smile. With a car, it would be much more convenient for her to go out for business or for sightseeing.

"What do you think?" Li Feng said with a smile.

"Well, hee - how about buying a better car? Like a BMW, Mercedes-Benz, Audi, etc. I heard that German cars are of good quality and have a century-long quality guarantee." Zhao Xinyue said, glancing at Li Feng's account from afar.

Lin Menghan added:

"Actually, Japanese cars are pretty good too. They're fuel-efficient, and there are quite a few high-end cars, like Infiniti and Lexus, which offer a great driving experience!"

Li Feng shook his head and said, "Xinyue, Menghan, your way of thinking is unacceptable."

Zhao Xinyue was puzzled, pouted, and retorted, "Why not? Isn't the money you earn meant to be spent? Otherwise, why would you make so much money? Wouldn't it be earned in vain?"

"The purpose of making money is to spend it," Li Feng explained. "What I'm saying is that your concept of consumption is wrong. When you spend money, you don't consider the concept of assets and liabilities."

"Assets and liabilities? What does this have to do with buying a car?" Lin Menghan looked at Li Feng suspiciously.

Li Feng continued:

"Assets are resources that can help us continuously earn income. Liabilities are just the opposite, they will continuously generate negative income. For taxi drivers and truck drivers, a car is an asset because they can earn money by driving it. But for us, buying a car is just a means of transportation, which is a liability. Not only do we have to pay a large amount of cash at once, but we also have to pay for gas, parking, maintenance, insurance, and so on every year, or even every month..."

"Not to mention, when buying luxury cars, they become second-hand cars, depreciating by 80%. The subsequent maintenance costs are even more staggering..."

Zhao Xinyue didn't like what she heard, and her little mouth pouted higher and higher.

Li Feng smiled and continued:

"I'd like to recommend another book to you: 'Rich Dad and Poor Dad'. You should all read it carefully to popularize financial knowledge. We must change our mindset from poor thinking to rich thinking, so that we can completely change the trajectory of our lives."

"The mindset of the poor is to constantly buy debt and work for money all their lives. They seem busy, but in the end, it's often all for nothing. The mindset of the rich is completely different. They constantly buy assets, slowly accumulate them, let the assets work for them, and ultimately achieve financial freedom."

"In terms of consumption, poor dads always spend ahead of time, indulge in conspicuous consumption, and even buy luxury goods. They use tomorrow's money to buy today's things. Just like many people today, in order to buy an iPhone, they borrow money from Huabei, then borrow money from Jiebei, and then borrow money from Jiebei and write IOUs... The result is that they spend all their money every month, every year... They may live a carefree and happy life, but they are trapped in debt for life, deeply trapped in the consumption trap, and unable to recover."

"Rich Dad, on the other hand, tried to reduce extravagant consumption and ostentatious spending as much as possible, and slowly accumulated assets..."

Lin Menghan pondered for a moment, but retorted:

"If everyone did this, who would still produce luxury cars? Who would still produce good mobile phones? Without these companies to innovate, I'm afraid technology would stagnate and no industry would develop..."

"Yes, any industry development has risks and requires someone to pay the bill," Li Feng said slowly.

"So, that's how the stock market came into being. The roots of the stock market can be traced back to the Age of Exploration over 400 years ago. To diversify risk and raise capital, the Dutch East India Company, then the dominant maritime power, issued the first 'stock' in history. Later, to trade these 'tickets', the first stock exchange in human history was established—the Amsterdam Stock Exchange. Later, the London Stock Exchange and the New York Stock Exchange were established."

After a pause, Li Feng continued:

"The development of any industry requires burning money, and the stock market is essentially a money-burning machine. The dot-com bubble of 1995-2001 burned trillions of dollars, ultimately giving rise to giants like IBM, Intel, Microsoft, Apple, and Google from the ruins. The super bull market in China from 2005-2007 wiped out enormous wealth, but also solved huge social problems. Similarly, the 2015 ChiNext bull market is also burning money..."

"What will burn out?" Lin Menghan asked.

"I don't know," Li Feng shook his head and said, "Scientific breakthroughs are very accidental. No one knows what will be discovered, but if you don't spend money, there will definitely be no chance."

"The development of technology requires enormous capital investment and carries significant risks. These costs require the stock market to assume a crucial financing function. Another portion of these costs, translated into high-priced products, needs to be borne by those who enjoy pre-emptive consumption, conspicuous consumption, and the pursuit of trends and fashion..."

"A sensible consumer will only buy reasonably priced items that they can afford. Similarly, a sensible investor will manage risk and stay away from those dazzling, risky, and uncertainly innovative companies in the stock market," Li Feng concluded. "So, this time, let's buy an ordinary domestic car. I think the Great Wall SUV is quite good."

"A domestic car? It has to be a joint venture car at least, right?" Zhao Xinyue frowned.

"Don't look down on domestically produced cars," Li Feng continued.

"What about century-old brands and craftsmanship? They're all built by throwing money at the problem. Domestic cars have been around for so many years, and their quality is already pretty good. If they spend more money in a few years, maybe they'll be like white goods, and beat foreign brands to a pulp..."

"Think about it. Seven or eight years ago, color TVs, refrigerators, air conditioners, and washing machines were all dominated by foreign brands. But in just a few years, they've all been domestically produced, with high quality and low prices. As Li Shufu said, a car is just a sofa with four wheels. It's not that difficult. It can't escape the basic laws of industrial development."

"Even if you don't believe it, you have to believe in common sense."

"We must have our own independent judgment and not just listen to the so-called experts."

Li Feng said a lot in one breath, including the history of stock market development and some money-burning innovations. She found it difficult to digest.

Lin Menghan thought for a moment and said, "If you want to buy a car, Yao Jiu knows someone. It's easier to get things done with acquaintances. I'll give Yao Jiu a call."

Li Feng waved his hand to stop him and said, "Let me fight."

Then he took out his cell phone and called Yao Jiu.

After hearing Li Feng's purpose, Yao Jiu agreed without hesitation. In less than half an hour, he drove a car and stopped in front of Hengtong Finance.

Li Feng sat in the passenger seat, Zhao Xinyue and Lin Menghan sat in the back seat, and the four of them drove towards the North Second Ring Road Automobile Trade City.

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