Stuff that makes you rich!
Wait, what! stuff that makes you rich? You gotta be kidding me stuff just cost me, you can say. Well, I'm not kidding. Stuff can make you rich and I am not talking about the stuff you order online and not about the diamond in the picture and some weird thing next to it. But I'm talking about the stuff called Assets.
Oh yeah! Assets, the term in finance...But it has something more to do with you and your money. I'll explain it.
Now, the exact opposite of assets is a liability. Sometimes both the terms are confused. Like, People think that they are buying assets but turns out that they are actually buying a liability So, what exactly are assets and liability. Knowing the difference between them is going to save you a lot of money.
An asset is something that will make you money, that adds money to your pocket. It helps you to build wealth and rich people buy it. For example, say you buy a home and you rent it Now, the home you bought is adding money to your pocket so, it is an asset if you rent it.
It is that simple. The home you live in can be a liability if it is not making you any money. what is a liability?
A liability is somethin that take money out of your pocket, that cost you for owning it. For example a car, it is not going to make you any money in fact it is going to cost you(maintenance cost). having a car is not a bad thing just saying it as an example to differentiate between assets and liability.
The same goes for debt. there are two types of debt, good debt, and bad debt.
Rich make them richer by buying Assets and so can you!
well, with that said here are the few assets that can make you money.
Stocks are not as complicated as you think or the media make you believe. In fact, buying stocks is the easiest way to own a percentage of ownership in a company that is listed in stock market. For example, when you buy Reliance stock, you own a percentage of Reliance a very small percentage to be precise and it is based on the number of stocks you buy. Internet has made investing in stocks easier than ever and with low entry barriers, you don't have to be rich to buy stocks.
When governments and businesses need money they can issue a bond so, when you buy a bond you are basically lending some money to the business, and in turn, you will receive some money as interest until the bond expires and the principal amount(money you invested) will be repaid. Bonds are considered as super safe investments and that's why it will produce fewer returns than stocks. "low risk = fewer rewards".
House! everyone needs one, as mentioned earlier it can be both an asset and a liability.
It can be an asset in two ways. Rent and Appreciation. so, you buy a property and rent it and money gets added to your pocket. The second way is appreciation, more and more people need a place to stay so, the demand increase, and prices go up over time and forever will, which makes real estate one of the best investments. Real Estate is not just about a house it can be office spaces, commercial spaces, and land.
Real Estate is often an expensive affair, instead, you can invest in a REIT (Real Estate Investment Trust). It is basically a company that owns, operates, and generates income from real estate. REIT can be traded and priced like stocks, when you buy one your money gets invested in real estate. More on that later.
Those are just a few assets that bring you money and you should invest in assets, not liabilities, Don't invest if don't know what you are doing and that's why investing in yourself is the best investment.
Subscribe to Walth newsletter to not miss out and share this post with your friends, they are an asset in your life. Stay tuned for the next post.