THE THREE PILLARS OF WEALTH

THE THREE PILLARS OF WEALTH Source
Real property & Assets, Forget the dictionary definition for a moment. Let’s talk about the real world. An asset is something that works for you, so you don’t have to work for the rest of your life. My poor dad always said, “Work for a job.” My rich dad said, “Build assets.” I only invest in things that make me money. If it makes me money, it’s an asset; if it takes money from me, it’s a liability. I have two Porsches. They’re liabilities. I own them free and clear, but they’re not putting money in my pocket; they’re taking money out of my pocket. It’s not rocket science. For people who understand this, the No. 1 asset is usually a business, and the No. 2 asset is typically real estate. And even with real estate, you have to understand the difference between cash flow and capital gain. Most people don’t understand this distinction. When they invest, they invest for capital gain. They’ll say, “My house went up in value. My car went up in value.” That’s capital gain, not cash flow. The purpose of owning real estate is to keep it as an asset, not to sell it for a profit. If you buy a piece of real estate for $100,000 and then sell it for $200,000, that’s not an asset; you just generated a $100,000 capital gain. You had to shoot the asset to get that money. You’ve killed the asset. It’s like selling your cow for money. I’d rather own the cow and sell the milk. (Culled from Robert Kiyosaki; Rich dad, Poor dad series – 21st century business mindset)

INVESTMENTS
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This is the critical level to work on until you can passively produce more income than expenses. OR, build your own growth start-up company you can sell for millions. I distinguish this final stage from the previous stage in that you’re buying “whole” businesses or real estate investments. At the previous stage, you’re buying “portions” of investments in the form of stocks, units of companies or limited partnerships. The final step in the financial game of life is to be able to buy cash flow businesses or income generating real estate in enough quantity that your income is higher than your monthly living expenses. Once you can do that you have won the financial game of life. You are financially free. This is the basic financial life plan. Financial education is where you learn to have money work for you rather than to have you work for money all your life time.

ENTREPRENEURSHIP [entrepreneurga411a941e_1920Investor tps://i.imgur.com/igdim9Q.jpg) Source
This is the best time. When times are bad is when the real entrepreneurs emerge. Entrepreneurs don’t really care if the market’s up or down. They’re creating better products and better processes. So when somebody says, “Oh, there’s less opportunity now,” it’s because they’re losers. I’m not saying employment is a bad thing. I’m just saying it’s only one way of generating income, and one that is extremely limited. What’s happening right now is that people are waking up to this fact. These people—including you—are realizing that the only way they’re going to have what they really want in life is by setting foot on the path of the entrepreneur. And by the way, I’m not the only one who sees this. You may or may not have heard of Muhammad Yunus, author of Banker to the Poor, but the Nobel Committee in Oslo, Norway, has heard of him. They gave him the Nobel Peace Prize in 2006 for his concept of microcredit for Third World entrepreneurs. “All people are entrepreneurs,” says Yunus, “but many don’t have the opportunity to find that out.” Robert Kiyosaki in one of his books quoted Forbes magazine defining “rich” as a person who earns in excess of $1 million per year (about $83,333 per month, or just under $20,000 a week), and “poor” as someone who earns less than $25,000 a year. But even more important than the quantity of money you make is the quality of money you make. In other words, not just how much you make, but how you make it—where it comes from. Breaking away from those typical job structures and creating your own stream of income puts you in the best position to weather an economic storm, simply because you are no longer dependent on a boss or on the economy to determine your annual income. Now you determine it. Here is an analogy that takes us to the next part of this article

Financial Security – E E = Employee Financial Independence – S S = Self-employed or Small-business owner Wealth-building – B B = Business owner Financial freedom - I I = Investor

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