Rich people buy assets, and the poor and middle class buy stuff. We have all heard this before but
how do we know an asset when we see one?
The first step is understanding the definition of an asset. I like Rich Dad's definition of an asset.
An asset puts money into your pocket, whereas a liability takes money out of your pocket.
Many people consider their home an asset. This is true, but the confusion is in whose asset it
truly is. If you have a mortgage on your home, then it is most likely your banker's asset and not
yours.
There are 3 asset classes: Real estate, business, and paper assets. Your biggest asset is you.
You can also be your biggest liability.
When you buy a business, the way you manage the business dictates whether it becomes an asset
or not. Your work ethic, your commitment, and your knowledge all play a role in the success of
the business.
If you want to be a successful investor the first thing you must work on is you.
It is also important to analyze your strengths and weakness, and then buy your assets
accordingly. For example, if you do not like to paint, do repairs, or do yard work, then a buying a
fixer-upper rental property might not be a good investment for you.
I have heard people talk down on home-based business opportunities, such as network marketing
or internet marketing. On the other hand, people tend to have more respect for franchise owners
or traditional business owners.
Since it is easier for people to get started in a home-based business, there tends to be more
people who are liabilities who get involved. Since they are liabilities themselves, when they get
involved in a home-based business, a lot of times their business becomes a liability.
A person who is a liability is a person who has a personal negative cash flow. How can a person
who does not manage his/her own finances responsibily, expect to manage the cash flow of a
business?
Alternatively, people who own traditional businesses tend to get more respect. Maybe it is
because they are able to afford the hundreds of thousands or millions of dollars to invest in a
traditional business. Whether that business becomes an asset or liability still depends on the
person.
Only after your business has a positive cash flow and puts money into your pocket, does it become
an asset. It is much easier to turn a home-based business into an asset because the expenses of
a home-based business are so much lower than that of a traditional business.
Earning $5,000 a month from an internet marketing business is the same as earning $5,000 a month
from a franchise when it comes to your asset column.
Remember that the most important asset when it comes to investing in your portfolio is you. This
should motivate you to always keep working on your investing skills, keep increasing your
knowledge, and continue to get better.
how do we know an asset when we see one?
The first step is understanding the definition of an asset. I like Rich Dad's definition of an asset.
An asset puts money into your pocket, whereas a liability takes money out of your pocket.
Many people consider their home an asset. This is true, but the confusion is in whose asset it
truly is. If you have a mortgage on your home, then it is most likely your banker's asset and not
yours.
There are 3 asset classes: Real estate, business, and paper assets. Your biggest asset is you.
You can also be your biggest liability.
When you buy a business, the way you manage the business dictates whether it becomes an asset
or not. Your work ethic, your commitment, and your knowledge all play a role in the success of
the business.
If you want to be a successful investor the first thing you must work on is you.
It is also important to analyze your strengths and weakness, and then buy your assets
accordingly. For example, if you do not like to paint, do repairs, or do yard work, then a buying a
fixer-upper rental property might not be a good investment for you.
I have heard people talk down on home-based business opportunities, such as network marketing
or internet marketing. On the other hand, people tend to have more respect for franchise owners
or traditional business owners.
Since it is easier for people to get started in a home-based business, there tends to be more
people who are liabilities who get involved. Since they are liabilities themselves, when they get
involved in a home-based business, a lot of times their business becomes a liability.
A person who is a liability is a person who has a personal negative cash flow. How can a person
who does not manage his/her own finances responsibily, expect to manage the cash flow of a
business?
Alternatively, people who own traditional businesses tend to get more respect. Maybe it is
because they are able to afford the hundreds of thousands or millions of dollars to invest in a
traditional business. Whether that business becomes an asset or liability still depends on the
person.
Only after your business has a positive cash flow and puts money into your pocket, does it become
an asset. It is much easier to turn a home-based business into an asset because the expenses of
a home-based business are so much lower than that of a traditional business.
Earning $5,000 a month from an internet marketing business is the same as earning $5,000 a month
from a franchise when it comes to your asset column.
Remember that the most important asset when it comes to investing in your portfolio is you. This
should motivate you to always keep working on your investing skills, keep increasing your
knowledge, and continue to get better.