How Owning Assets is Better than a Job
After reading the book Rich Dad Poor Dad, most people come under the conclusion that owning assets is better than having liabilities. That is so true. “The rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.”
What are Assets?
Assets are things that generate income. When I go into work, the asset that generates income for me is my skill. Once that skill is outshined by others my asset is no longer valuable to me.
This passive income in the long run will help create more and more wealth, by the use of compounding interest. It will also allow you to not have to rely on working as well.
Passive Income creating wealth:
Compounding interest is the interest or the rate of return of an asset that is compounded. If your portfolio generates 7% annually and you compound it for the next 30-40 years then it could be a big number.
Owning Assets can make you wealthy
Owning assets is a major thing that rich people often do. If they have assets producing passive income they will not have to produce active income as much, and then they will be able to concentrate their mind and skills on other avenues of life.
Financial Independence with Owning Assets
The simple way to find out if you have enough money or assets producing enough is to find out your financial independence number. We do this by using the 4% Rule. Take your spending X 25= FI number. So if you take $25,000 x 25= $625,000. $625,000 will be the amount of money you need to safely withdraw 4% from every year for the next 30 years.
Owning assets makes this machine roll. The more you own the less you have to work at your job. That is the name of the game. Work less and get paid more.
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