What is assets? According to dictionary, “asset” is anything owned by an individual that has a cash value. This includes property, goods, savings or investments.
In order to be rich, let’s look deeper into the meaning of ASSET. The definition of an asset according to Robert Kiyosaki is something that puts money into your pocket on a monthly basis as opposed to something that takes money out of your pocket. This is very much different from the “asset” we know in accounting.
CAR – If we buy a car for our personal use, it might be a liability rather than an asset. Even though we buy it using cash without any a hire purchase agreement, we still have to pay the maintenance, road tax, car insurance and petrol. Even worse if we buy the car with loan. The car is an asset of the bank but a liability of the car owner. In contrast, if a taxi company buys a car and rent it to a taxi driver. In returns, the taxi driver would have to pay a certain leasing fees to the company. Thus, the car is an asset to the taxi company, but a liability to the taxi driver.
Be smart to acquire income-generating assets. Wealth is accumulated a lot faster if we are smart enough to buy assets that give us passive income.