If you want to be rich, you’ve got to BUY ASSETS. So what is an asset?
Using a simple definition from Robert Kiyosaki in his must-read book “Rich Dad Poor Dad“, an asset is something that puts money INTO your pocket, whereas a liability is something that takes money OUT OF your pocket.
Let’s take a car for an example. Here in Casablanca people are crazy enough to spend big money on nice cars, despite the fact that the roads often have pot holes, the air is salty and dusty so cars need to be washed daily, (if you want it to look clean), and there are mopeds bumping you while you wait at stoplights (my car has several scratches that I received while stopped!)
So if you’re crazy enough to buy a Range Rover…is that an asset, or a liability?
The bank may list it as an asset, but by Kiyosaki’s definition…it’s a liability. You need to pay for insurance, road tax, repairs and maintenance, fuel, car washes, and of course, depreciation. Over time, the car is worth less and less money – the value is DEcreasing! Cars take money OUT OF your pocket – they are liabilities.
What about investment real estate…is it an asset, or a liability?
If you buy an apartment, a villa, or a piece of land, it’s an asset. The property puts money INTO your pocket, if you manage it properly. Though you may have to pay for property taxes, repairs and maintenance, insurance, and management fees, the rent covers these costs, and keeps your income higher than your expenses. Money comes INTO your pocket – it’s an asset. Plus, real estate APPreciates over time – the value goes UP!!!
Other examples of assets include financial products such as stocks, bonds, or mutual funds, a business you own but are not required to work at full-time, and intellectual property such as art, music, books, trademarked systems, websites…
If your goal is to become rich, then you must figure out how you can Buy Assets.