I THINK I INVESTED IN AN MLM COMPANY

02 May 2021

I heard this phrase from several people.

Investment is a “hot word” these days.

I suspect people make misuse the word “investment.”

HERE’S AN EXAMPLE:

Me: How are you spending your free time?

Friend: My girlfriend and I invested in a business.

We now run a food stall near a crowded location.

Me: How much did you shell out?

Friend: We shelled out about half.

Me: Okay. How much money are you earning from that business?

Friend: My girlfriend has some family members that need help and the money doesn’t belong to anyone specifically.

Me: Okayyy… Does the business registration have your name and the percentage of your share in the documents?

Friend: No.

Me: You shelled out at-least half the capital. You ferry all the equipment and supplies using your car. You help with manning the store or whatever the business needs. You help spot expenses in the event of a deficit.

Friend: Yes.

Me: Just to confirm. You don’t have your name and the percentage of your share in your business. You also do not receive a cut from the sales. Is that correct?

Friend: Yes.

Me: Let’s begin speaking the truth here. That’s not an investment. That’s not your business. You don’t have shares. You’re helping out. That business is hers and not yours. You are a volunteer. You shelled out money buy you are not an investor.

Friend: I guess so.

WARNING: Please do not ask me to coach you in the future.

I’m likely just going to hurt your feelings.

WHAT IS INVESTING?

Investing is to expend money with the expectation of achieving a profit or material result by putting it into financial plans, shares, or property, or by using it to develop a commercial venture.

This is the dictionary definition.

Investments come with a documentation of ownership and the cuts are clear.

Investopedia defines investments as:

Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit. You can invest in endeavors, such as using money to start a business, or in assets, such as purchasing real estate in hopes of reselling it later at a higher price.

Okay now that we’re clear here’s the topic I’d like to discuss.

Salespeople and business earn their money by selling products and services.

A real estate person will say “invest in this property.”

A luxury brand will say “invest in yourself.”

An educational product marketer will say “invest in your education.”

Health and fitness sellers will say…and you guessed it… “invest in your health.”

Any product or service is not labelled as an “investment” because investments are more sellable these days.

If I’m selling organic buko juice, I can say, “invest in your health and happiness.”

I’m hearing the word “invest” more often these days.

I usually hear “invest” when a person is encouraging me to shell out my money.

Using the word “invest” is incredibly common, I have practiced asking myself, “are we really talking about investments?”

“Are we just using the word investment to justify a buying decision?”

When people say “I invested in an MLM,” I’m like “no you didn’t.”

You likely bought products and signed a membership form.

That’s it.

You can technically sell those products but I doubt you will.

The upline encourages you to use those products yourself and buy a new kit to sell.

You also paid for those products at retail price and MLM products are marked up that the prices are at par with luxury brands.

So it’s still not an investment.

I have a love/hate relationship with Robert Kiyosaki, however, he has this interesting way of phrasing assets and liabilities.

An asset is anything that you own that generates money.

A liability is anything that you own that generates expenses.

Going with that logic, MLM membership fee or startup package is not an investment.

You just hope that it’s an investment.

The word “investment” is casually thrown around to encourage the sale of goods and service.

As a consequence, more and more people say that they are “investing” without without doing any investing.

Published on 02 May 2021 Find me on Twitter!