We are either working to fulfill our personal needs or investing for future desires. Investing for future is normally a next step after our personal needs are met. But profit margins goes down in an investment compare to working for our personal consumption. So working for wealth creation should be approach with caution.
Assume a person does a farming and grows some vegetables or fruits. If he or she consume those vegetables or fruits for his personal use, the benefits are quite rewarding. He is actually saving money which is market price minus cost of production. Now if he starts producing more and try to sell in the market. Assuming his cost remains the same , selling price has to be less than market price. His profits goes down. Same thing happens when a person buy a house for his own use versus buying second home. In case of first home, the rewards are quite high. Tax is less, occupancy is 100%. Now for second home, the rent can be treated as income, taxes are more and occupancy may not be 100% based on rental market.
Normally, when person realizes the benefits of working for personal consumption, he gets carried away and start investing. It does not mean that one cannot make money on investment but it requires different technique to make profit. one should only consider when they really have excess money to invest. So think twice before investing in assets other than for personal use.
