Buying Assets As An Entrepreneur
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For so long, people confuse being rich with looking and seeming rich. I can assure you that these are world's apart. In recent times, you see people flashing luxurious car in your face and seemingly lovely looking houses. And you're quick to assume that they're doing better than most, but in reality they're living in a very delicate world.
You see, many people would go as far as to collect loans to buy a car. And if you check properly, you'll obviously see that they're in no way in need of a car, as the public transport may even serve them way better. But because of the urge to show off to their peers and old school mates that they're having life all rosy. They get into these debts.
Like it always is, at the beginning it's all smooth sailing, until some day when the loans are due, and the banks and everyone is hovering over their heads for their money. That's when reality sets in on them and they realize that they have nothing. In some cases, all the cars and properties are taken from them to pay off their loans.
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You may have heard of this a thousand times, but allow me make it a thousand and one. You cannot become rich by acquiring liabilities. You only become truly rich, not acting rich, but truly rich by acquiring assets. And doing so intelligently. You may want to first ask, what's a liability? And that will be a fantastic question.
Without wasting your time with ambiguous words, let me simply put it this way, liability is anything that takes money from you and doesn't actually add to your wallet. Let's take for example, a car. When you buy a car, first you used money that could have been invested else where to buy it, then you fuel the car. When the car has issues as is usually expected. You spend money fixing it. At no point, is that car giving you money.
Although, there are ways a car can be an asset. Perhaps, you really need your car to get to work early and that job earns you a lot of money. Then that car is an asset, because your expenses on the car is compensated for with the profit you make by getting to work early. Also, a car can be an asset, if it's used for transport business. Hence, it's generating money for you. Otherwise, it's mostly a liability, as it's value goes down with time.
On the other hand, an asset is something that brings money into your wallet. For example, you buy a landed property in a lovely location, and over years properties in that location go up in price. That means that you're making money by simply having that property, as it's value in steadily increasing. In the end, what it comes down to; is acquiring things that will appreciate in value. Those are assets. And that's the way to become truly rich.
