As the wealth gap expands in America you have to ask yourself, what do the wealthy know? The secret is financial education. They know the rules of the game, and they play it well.
Unfortunately, finances are not taught in school, and the middle class pays dearly. Some common ideas spread by the poor is going to school, getting good grades, and landing a good job.
The problem is your job does nothing for you. Yes, you get a paycheck, but you also get taxed heavily. You can’t sell it, pass it to your kids, and it’s not even guaranteed. So while this may be a good place to start, it’s not where you should finish.
Additionally, another mistake is not knowing the difference between assets and liabilities.
Liabilities are items that take money away from your bottom line.
For example, your car is a liability. It will never make you money, and you must pay to use it.
An asset, on the other hand, provides you with additional cash flow and usually increases in value over time.
We’ll cover the 4 assets that you must obtain to secure a life of financial freedom.
Owning a business is one of the best assets you can have. You create an additional revenue stream and get tax breaks that are not afforded to the average citizen.
If leveraged correctly your business can scale and become a huge cash generator for years to come, providing financial security for you and your family.
Businesses are also relatively cheap to start, making this an easy decision as you make your next step towards financial freedom.
2. Paper Assets
Stocks, Bonds, and CD’s
Stocks are the most common investment vehicle. When you buy a stock, you purchase a share of a company hoping that it rises in value.
As the market fluctuates, so goes the value of your stock. It will continuously rise and fall with the flow of the market.
The better the company, the better your chances for a return. Profits are never guaranteed, so a certain degree of caution is recommended before purchases shares in the stock exchange.
CD’s are also considered paper assets. It is a certificate of deposit to your bank with a fixed maturity date. You place your money here and collect the interest plus the principle on the set date.
CD’s are a relatively low-risk investment but not readily available. It comes with penalties if you decide to pull your cash before the established date.
The last form of paper asset is the Bond. A bond is a loan to a company, government, or organization. Essentially you are lending your money to one of these entities with the understanding that you will collect interest over a set period. In this case, you are the creditor and the establishment is the borrower.
3. Real Estate
Owning properties and land will always be lucrative. No matter what happens to the economy, people will always need a roof over their heads.
Coincidentally the world is a small place and is also limited on space. So real estate is easily one of the most valuable assets you can obtain. You can choose to buy and sell or simply hold.
Keeping rental properties is usually preferred as it creates steady cash flow every month.
It’s the same strategy used by landlords that cash in every time you pay the rent.
Precious metals, oil, grain, and raw materials are all considered commodities. These items are used every day and will always be in high demand.
Having physical possession of raw materials provides immediate value to consumers and manufacturers.
Commodities will always give you a return on investment and are great assets to hold.
You need to educate yourself on finances before you have a chance of becoming rich.
Without having the proper knowledge you can fall into debt, and forever be in the perpetual rat race.
If applied correctly, buying and holding onto these assets can provide you the financial freedom that you’ve always dreamed.
Read about and study these investment vehicles so you can secure a future for you and your family.