Don’t Fail Before You Start! 3 Critical Considerations Before Making Any Investment
In previous articles, I have discussed how modern professionals must break free from a life 100% dependent on a corporate salary to survive in the coming era.
The days of simply saving your salary for retirement and drawing it down in your later years are over.
We must design life plans tailored to a new reality.
As life expectancy increases and careers lengthen, relying on a single company or a single career path is no longer viable. We must adopt new mindsets—such as "reskilling"—to navigate evolving professional landscapes.
Moreover, it is not enough to merely save; we must master the art of "investing."
In this article, I will explore the essentials of developing this relationship with money.
The Core of Investing: How to Take Risks
Imagine an investment that guarantees your principal and offers a 5% annual return.
If you invest $10,000, you get $500 back with zero risk.
Almost anyone would jump at such an offer.
Unfortunately, in the real world, "risk-free" investments do not exist.
Therefore, the most critical challenge in investing is determining how to take risks.
Mastering risk-taking opens the door to a completely new relationship with wealth.
"Taking Risk" Does Not Mean "Preparing for Loss": 3 Key Principles
In my view, taking a risk is not synonymous with simply resigning oneself to loss.
Instead, taking a risk means "attempting a venture within a range where you can recover even if you fail."
To achieve this, keep these three points in mind:
1. Start Small
2. Operate from a Safe Position
3. Use Surplus Funds Only
1. Start Small
Begin with an amount that allows you to stand back up if you lose it.
Embarking on high-leverage investments (taking on massive debt) without experience often leads to irreparable failure.
2. Operate from a Safe Position
For a salaried professional, your "safe position" is your employment.
As long as you maintain your monthly salary, a failed investment won't ruin your life tomorrow.
Do not quit your job prematurely or carelessly.
3. Use Surplus Funds Only
The golden rule is: Never invest your living expenses.
You must ensure there is still bread on your table tomorrow morning, even if an investment fails.
Furthermore, without financial leeway, you may be forced to exit an investment under unfavorable conditions.
Having a buffer allows for a long-term perspective
enabling you to wait for a market recovery even during temporary downturns.
3 Things to Evaluate Before Investing
Before taking a risk, you must clear these three hurdles. If you cannot satisfy these conditions, you should not invest.
1. Understand exactly what the risk is.
2. Establish an exit strategy.
3. Ensure the return justifies the risk.
If these three points are not clear, you should not invest, in other words, you should not take risks.
Let’s examine these using real estate investment as an example.
1. Understand exactly what the risk is.
Identify the risks and determine how to mitigate them.
Never invest in something you do not understand.
In real estate, for instance, there is "vacancy risk."
If you set rent ignoring local market rates and cannot find a tenant, your return vanishes.
You must personally verify the rental potential of a property before buying;
never blindly trust a broker’s "projected" rental income.
2. Establish an exit strategy.
Know your exit—the way to escape in a worst-case scenario.
Failure is a form of learning, provided it is a "recoverable failure."
If reality deviates from your assumptions, you simply retreat.
In real estate, if you use a large loan, your "exit" is whether you can clear the mortgage upon sale.
If you cannot retreat, you face potential bankruptcy.
High-status corporate employees should be particularly careful, as their credit score often allows them to secure large loans even when they are novices.
3. Ensure the return justifies the risk.
Investment always involves risk.
Why take it unless the potential reward is worth it?
You must simulate your returns
—such as rental income vs. expenses—accounting for vacancies and unexpected repairs.
Without a realistic simulation, your returns will be squeezed, and your business may become unsustainable.
At worst, the business will go under.
As I have said many times, if these three things are not clear, you should not invest, in other words, you should not take risks.
Please refer to the following article for more information on real estate investment.
Summary
In the past, lifetime employment allowed people to succeed by mastering skills specific to one company.
However, we are no longer in an era where the standard lifestyle of graduating from school, getting a job at one company, working until retirement, and then living off a pension will be acceptable.
Even Toyota has signaled that maintaining lifetime employment is difficult.
The era of "security through a permanent position" is over. Relying solely on a single income stream is the most dangerous path in the modern era.
While we cannot rely on corporations, our lifespans are getting longer and pensions more uncertain. The only solution is to change ourselves.
We must depart from a life 100% dependent on a corporate paycheck.
About the Author Kenji Kamioka
CEO, Julius Inc. / FIRE Practitioner
Kenji Kamioka is a former IT executive who spent 30 years in the corporate world, with over 10 years working across Asia. His life changed when he read Rich Dad Poor Dad.
Realizing the trap of the "rat race," he started building assets in real estate and stocks while still working. It took him 10 years, but he successfully achieved Financial Freedom and graduated from the salaryman life.
He established his own asset management company to optimize tax efficiency and now dedicates his time to teaching others how to escape the corporate cage.
His advice is not theoretical but based on the gritty reality of achieving FIRE.AFP (Certified by the Japan Association for Financial Planners), Licensed Real Estate Transaction Specialist
Book
❶『令和のサラリーマンの為のFIREのススメ』(Amazon電子書籍）
❷『FIRE Recommendation for Office Employee』(Amazon Kindle）
