Wealth Creation Step Two: Use YOUR Savings to collect Assets.
In any discussion of using assets to reach wealth it is important to clarify what we are actually talking about.
The simplest definition is:
"An Asset puts money in your pocket,
a Liability takes it out."
How simple is that?
So why is there such an industry fog over what is these terms actually mean? Could it possibly have anything to do with the KICKTB principle so many industries have. Keep It Complex, Keep Them Billable.
The main difference between the Rich and the Poor is that the Rich buy things which make them more money and the Poor buy things which cost them money to own. I include the high income earning Middle Class as Poor - Why? They normally have very high financial commitments and no spare money. Take the
Rich vs Poor assets test
and find out where you stand.
Reach Wealth with any of these:->
- Stocks & Bonds
- Income-generating Real Estate
- Mutual Funds
- Notes (IOU)
- Royalties from Intellectual Property (music,scripts,patents etc.)
- Any Business that isn't daily hands-on. Owned by one person, managed by another. If you have to work in it, it's a job not a business.
- Anything else which has value, produces income or appreciates and has a ready market.
- Personal Loans for a Car.
- Personal Loans for Holidays.
- Using Credit Cards for Groceries
- Home Mortgage
- Home Ownership
- Car Ownership
- Anything which doesn't at least cover the cost of ownership or costs you money to have.
This is not to say that you shouldn't have any liabilities at all. It is not possible to completely eliminate liabilities, you just need to know the difference so you aren't fooled by any industry flim-flam artist.
The Banks are right when they call your home your biggest asset, they just fail to tell you that it is an asset for them - not for you.
If you truly want to be Rich you must learn this step very well. When you do, the things you buy will help you to reach wealth. The alternative is that your investment strategy will always be crawling along.