Do you know? 99% percent of the world’s wealth is concentrated to only 1% of the population. You may be thinking that they had rich dads. They just got that by luck. It was easier to earn in the 80s or 90s. Blah. Blah.
Even if we believe the above-mentioned things, research has found out that if all the world’s wealth is collected at one place and is distributed to the whole population evenly. Then, in just a period of about 5 years, that money will return to where it belonged earlier.
Shocked?? You should be. Because the reason for the reversal of that money will be you, your bad habits, your silly actions, your crap thinking, your money management. By keeping it in mind, brainstorm a bit. If those guys can do that (bring the wealth back) then there must be a way, with which you can also do that.
What we do is to spend the majority of our earnings on the liabilities which we think are assets. Don’t believe me? Keep Reading. It doesn’t matter if you are a student, a field worker, an employee, a manager or a businessman. It’s highly probable that the money you have is not fulfilling your wants that’s why you are here.
Assets vs. Liabilities
A normal man fails to find the difference between an asset and a liability. I want to give a simple definition here. Anything which gives you returns on the investment is an asset whereas anything which will need more money to be poured in after the initial investment (for its functioning) is a liability. I assure you that until the end of this article, you will get this difference more clearly.
Suppose, if some mysterious power appears tonight in your bedroom and grants a power to buy “anything you want” for the next 24 hours, all free. What will you buy? Think. Think. An iPhone, a Porsche, a private jet, a platinum ring for your girlfriend. The list is long.
Ok, so, now 24 hours have ended and we are left with some really awesome stuff which you always dreamt of. Happy. Very Happyyy. So, Sir, you have bought a lot of stuff. But, how will you keep them running now? How will you be buying the fuel now? Willn’t your girlfriend be asking for a more precious gift next time? Are you expecting that almighty power to appear again to wish for fuel barrels or a new ring?
Back to Normal…
I understand that in reality, we have never got any power to buy just anything for free. But, you must also understand that we mostly never figure out how we will be tackling the extra car fuel cost once we buy that. Or how we will pay to get our iPhone screen replaced if it ever got broken (Baby, it costs around Rs. 18000 for iPhone X which is almost equal to a nice looking new Samsung).
In day to day life, we save money and spend on liabilities. It’s not a problem. We ought to enjoy our lives. The real problem is after we get a liability, we can’t save as much we used to save earlier because that liability is also eating some part of income now.
Let’s take an example of a guy named Akash who earns Rs.30,000 per month. They had a long desire to own a car. So, he and his wife by cutting all the savage costs saved Rs.10,000 pm & bought an Alto in just a year. Finally, desire got fulfilled. But, now there is a problem. After buying that car, they can’t save the same Rs.10000 pm because car fuel & maintenance cost goes close to Rs.5000 each month.
They are proud owners of an Alto 800. Hmm, they can save money one or two times more. And after years of savings, they can get some more things they want (liabilities). Each time, the liability will impact their saving ability. Then, a day will come when they will not be able to save more money at all. Expenses (increased enormously because of the liabilities) will surpass the Income. They will be on a path of recession. And for getting out of that recession, they will be needed to sell the things (liabilities) they had bought.
CONCEPT OF PASSIVE INCOME
Passive income is the income for which you are not needed to rub your ass off like your day job. I mean, it’s the income which is generated automatically for you. “Wow! It sounds nice. Why haven’t I got my passive income paycheck yet? Hmm, I think I will get it on my retirement.” Wait, son, wait. Same is not true regarding sources which generate passive income. They demand some hard work and perseverance to get build.
The passive income sources will actually be your real assets. There are enough ways to get them. I am also very sure that you can acquire them if you have the ability to save money for a car. How will investing in an asset be beneficial rather than on a car? Lad, a car will eat money whereas your assets will provide you money to eat.
But, you want the car. We are humans and we want some sort of gratification for all the work we do. You will get the car. You can use your passive income to buy your dream stuff after you start getting that (income). As a whole, from the day job, you will save money to invest in the assets. Then, your assets will pay you back for investing in whatever liability you want to buy.
The question now left at the end is, How will you gonna get insanely rich? Learn to identify liabilities that can be evaded and assets that can be built in your own life. Articles can’t teach you all. Then, stick to the habit of investing the most in good assets and least on the liabilities.
All Present-day millionaires also do this. I agree that they spend a bomb on liabilities. But, dude, your eyeballs will pop out if you tried reading the number of zeros present in the net worth of Jeff Bezos or someone like him (Rs. 8024102000000 for Jeff). Now, just guess (in your mind) the amount those assets will be generating as passive income each month. Hold on something, you may fade out.
Thanks for reading. My purpose will be fulfilled even if you cut just a single liability of yours. Assets can be gathered slowly over time. Just follow the millionaire mindset.
For now, you can read this step by step guide to become a better investor.