Robert Kiyosaki is a well known author and successful businessman!
A large part of Kiyosaki's teachings focus on generating passive income by means of investment opportunities, such as real estate and small businesses, with the ultimate goal of being able to support oneself by such investments alone. Kiyosaki also defines "assets" as things that generate money, such as rental properties or businesses, and "liabilities" as things that cost money, such as house payments, cars and so on. Kiyosaki also proclaims financial leverage to be critically important in becoming rich.
He stresses what he calls "financial literacy" as the means to obtaining wealth. He says that life skills are often best learned through experience and that there are important lessons not taught in school. He says that formal education is primarily for those seeking to be employees or self-employed individuals, and that this is an "Industrial Age idea". And according to Kiyosaki, in order to obtain financial freedom, one must be either a business owner or an investor, generating passive income.
Kiyosaki uses the "rich dad, poor dad" series of books to illustrate his view that the majority of people are stuck in what he refers to as "the rat race"-living paycheck to paycheck and spending all of their time working to pay bills. In his books, Kiyosaki advocates tax-advantaged investment vehicles, such as real estate or businesses, rather than ownership of securities. This idea is further developed in his later books and "Rich Dad" became Kiyosaki's personal brand for various publishing ventures.
Although Kiyosaki recommends investing in real estate usually for rental income, there is one thing that he doesn't seem to teach...how to pay-off your rental property and even your house in one-third the time! If you would like to know how to rapidly pay-off your mortgage and other debts and supercharge your retirement account, visit my site for a free report at:
www.financialadvantages.com
My name is Steve Herman and 5 years ago I discovered a way to rapidly pay-off debt and rapidly fund a retirement account! my website is http://www.financialadvantages.com
Article Source: http://EzineArticles.com/?expert=Steve_Herman
Showing posts with label assets and liabilities. Show all posts
Showing posts with label assets and liabilities. Show all posts
Sunday, October 18, 2009
Saturday, October 17, 2009
Assets and Liabilities
If you want to become rich and be able to retire early then the most important thing you learn is the difference between an asset and a liability. Rich people understand the difference and buy assets that make them richer, the poor and middle class do not understand the difference and thus make poor investment decisions that instead of making them richer actually work to make them poorer.
People work all their lives in an attempt to get richer, but with every pay increase their debt and expenses also increases. This increase in debt and expenses forces them to work harder just so they can make ends meet. With the simple understanding of the difference between assets and liabilities these people could be getting richer and richer instead of poorer and poorer.
If you go to your bank and ask them what an asset is they will tell you it is anything you own that has monetary value. But this is often inflated as value is just an idea until it is actually sold. This is NOT what an asset it. Your suits, your computer, your playstation, your cars are not assets they are liabilities. If you want to be rich then you need to start thinking like the rich do and the rich think differently about assets and liabilities.
To make it really simple to understand an asset is something that puts money in your pocket on a regular basis and a liability is something that takes money out of your pocket on a regular basis. For example, you car is not an asset it is a liability because it takes money out of your pocket for petrol, insurance, registration and maintenance. Your house that you live in is not an asset but is a liability because it takes money out of your pocket through maintenance, insurance, council rates and taxes etc. Rental investment properties can be both assets and liabilities depending on whether or not they put money into your pocket on a regular basis or take money out.
So an asset puts money into your pocket and a liability takes money out of your pocket. Rich people know the difference between assets and liabilities and they buy assets. By purchasing assets that generate you income you are increasing your means. Each time you purchase an asset your income goes up, giving you more disposable income and more money to invest each and every year. If you continue to use your money wisely your income will go up and up and up and it will be easier and easier to become richer and richer.
A lot of people will tell you that the smart thing to do is to save money. But rich people think saving money is risky. The cost of living is constantly going up due to inflation, which means the buying power of the dollar gets less and less every year. My mum used to be able to buy a bag of lollies for a penny when she was a kid, and now you can barely buy a bag of lollies for $1. Its the same thing, but the buying power of the dollar has gone down. So every year your money is going down in value if you simply save it.
However, if you purchase an asset like an investment property, when the buying power of the dollar goes down your property goes up in price to compensate, and not only that but your rents also go up to compensate. All the expenses of inflation are passed onto other people so you don't lose money at all. If you just save money in the bank you $100,000 today would be effectively be worth a lot less in 10 years time.
Rich people don't work for money they work to buy assets that generate them income. They understand that money decreases in value and they want to buy assets that will work for them so they don't have to work for money. Both rich people are poor people go to work, but their motives for working create bipolar outcomes. One becomes richer as they work less and less and one becomes poorer as they work more and more.
Finding assets to purchase can be a little more difficult than simply understanding the difference between an asset and a liability. I want to help you learn more about purchasing assets so you can become richer and richer. That is why I created a free email training program for anyone who wants to learn more. Go to http://www.richacademy.com and sign up now and you will receive a free copy of my audio teaching "How To Become Rich Without Making More Money". But hurry while it is still free.
If you want to be rich first you need to understand the difference between an asset and a liability. Then you need to learn how to buy assets. So don't waste anymore time. Hurry over to http://www.richacademy.com and sign up today and start learning how you can be rich.
Article Source: http://EzineArticles.com/?expert=Ryan_Mclean
People work all their lives in an attempt to get richer, but with every pay increase their debt and expenses also increases. This increase in debt and expenses forces them to work harder just so they can make ends meet. With the simple understanding of the difference between assets and liabilities these people could be getting richer and richer instead of poorer and poorer.
If you go to your bank and ask them what an asset is they will tell you it is anything you own that has monetary value. But this is often inflated as value is just an idea until it is actually sold. This is NOT what an asset it. Your suits, your computer, your playstation, your cars are not assets they are liabilities. If you want to be rich then you need to start thinking like the rich do and the rich think differently about assets and liabilities.
To make it really simple to understand an asset is something that puts money in your pocket on a regular basis and a liability is something that takes money out of your pocket on a regular basis. For example, you car is not an asset it is a liability because it takes money out of your pocket for petrol, insurance, registration and maintenance. Your house that you live in is not an asset but is a liability because it takes money out of your pocket through maintenance, insurance, council rates and taxes etc. Rental investment properties can be both assets and liabilities depending on whether or not they put money into your pocket on a regular basis or take money out.
So an asset puts money into your pocket and a liability takes money out of your pocket. Rich people know the difference between assets and liabilities and they buy assets. By purchasing assets that generate you income you are increasing your means. Each time you purchase an asset your income goes up, giving you more disposable income and more money to invest each and every year. If you continue to use your money wisely your income will go up and up and up and it will be easier and easier to become richer and richer.
A lot of people will tell you that the smart thing to do is to save money. But rich people think saving money is risky. The cost of living is constantly going up due to inflation, which means the buying power of the dollar gets less and less every year. My mum used to be able to buy a bag of lollies for a penny when she was a kid, and now you can barely buy a bag of lollies for $1. Its the same thing, but the buying power of the dollar has gone down. So every year your money is going down in value if you simply save it.
However, if you purchase an asset like an investment property, when the buying power of the dollar goes down your property goes up in price to compensate, and not only that but your rents also go up to compensate. All the expenses of inflation are passed onto other people so you don't lose money at all. If you just save money in the bank you $100,000 today would be effectively be worth a lot less in 10 years time.
Rich people don't work for money they work to buy assets that generate them income. They understand that money decreases in value and they want to buy assets that will work for them so they don't have to work for money. Both rich people are poor people go to work, but their motives for working create bipolar outcomes. One becomes richer as they work less and less and one becomes poorer as they work more and more.
Finding assets to purchase can be a little more difficult than simply understanding the difference between an asset and a liability. I want to help you learn more about purchasing assets so you can become richer and richer. That is why I created a free email training program for anyone who wants to learn more. Go to http://www.richacademy.com and sign up now and you will receive a free copy of my audio teaching "How To Become Rich Without Making More Money". But hurry while it is still free.
If you want to be rich first you need to understand the difference between an asset and a liability. Then you need to learn how to buy assets. So don't waste anymore time. Hurry over to http://www.richacademy.com and sign up today and start learning how you can be rich.
Article Source: http://EzineArticles.com/?expert=Ryan_Mclean
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