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Asset is More Valuable than money
Which is more Valuable - Asset gold money?
For the Rich, Asset is more valuable than money (Currency Now) while for everyone else, money (Currency) is more valuable than the Asset.
Let me explain you why Asset (stocks, bonds, Gold, Real Estate, Mutual Funds, businesses, Web Properties, Intellectual Properties... etc..) is more valuable than money?
Well, This is because is something which keeps appreciating Asset in its value forever while money is something which will lose its purchasing power over the period of time because of the inflation.
In 2003, the Gold price was US $ 300 per ounce and in 2010, it is $ 1200 per ounce. This means that in 2003, you would able to buy the some amount of goods and services for $ 300 and today in 2010, you can buy the same amount of goods and services for whooping $ 1200.And this is the depreciation of money by four times in just 7 years because of the inflation.
So it means that if today (in 2010) you have $ 1200 in your pocket than after 10 years, you won ' t be able to buy the same amount of goods and services in the economy.Purpose if today you have 1 ounce of gold (or any other Equivalent Asset such as stocks, bonds, real estate, websites, blogs, art, mutual funds... etc...) in your pocket than even after 10, 20, 50 years you will be able to buy the same amount of goods and services from the economy.In fact, you will be able to buy much more amount of goods from your assets in the future.
Diagram: 48 - Old Financial Advise - Save Money. Modern Financial Advise - Save & Invest Money
In other words, preserve and increase your purchasing power Assets.While money reduces your purchasing power because of the inflation.
And this is the reason why Rich people focus on the Asset column of their financial statement rather than the Income (Like Middle Class people) and accumulate more and more assets out of their money.
Rich buy assets in exchange of their money while middle class save and accumulate money thinking that one day they will become rich.See the rules of money have been changed after 1971 when the US president Nixon has removed the Gold Standard and made US dollar the free float currency and later on the entire world has removed the gold standard.
Middle class people are savers and the savers are losers because the money that you save in your bank accounts will eventually lose its purchasing power over a period of time because of the inflation making you poor.
So the smart thing is to create or acquire assets.Rich people know this secret of money and assets since their early life and that ' s why from very early life they spend their time and energy to either create assets or acquire assets out of their money. Whenever rich have surplus money on their hand, they simply buy assets out of their money. They keep accumulating more and more assets in their asset columns rather than saving more and more money like middle class.
In True Sense, money is not your Asset but it ' s your liability.This is because your saved money which sits idle into your bank savings accounts will ultimately lose its purchasing power and the value because of the inflation.
While the Asset not only beat the inflation but also appreciate in its value as well as provide you a steady passive income. Thus, acquiring assets one time is hard work and after that weather you work or not, money will keep flowing into your bank accounts (Passive Income).
While Saving money is a life long process. No. matter how much you save, if you are not going to buy assets from your saved money than ultimately you are going to be poor in spite of how much you save.
Rich teach their kids since their childhood that the Asset is more valuable than money and that ' s why they should always think to grow the asset column of their financial statement rather than focusing on the Income (Active Hard Earned Income).
While Middle class people teach their kids since their childhood to focus only on the income and nothing else. And that ' s why they force their children to work hard at school to get good grades and after that find a safe and secure job and work hard at the job place to earn higher monthly income. The middle class people think around the Income. They focus their time, energy and mind to increase their Income. And to increase their income they take more and more educational degrees and work over time at their jobs or take part time jobs to increase their income.
Goal they don ' t know that this is the current income and the day they will stop working for their current income, their entire income stream will be suddenly disappear.More their saved money will also lose its purchasing power over the period of time.The inflation will erode the purchasing power of their money.
While Rich know that Asset is more valuable than the Income and that ' s why they focus their mind, time, money and energy to create and acquire more and more assets and grow their asset column.They also know that building the Asset column thee one time is hard work only and after that their Asset column will generate passive income for them to maintain which they won ' t have to work any more.
So after building the Asset column, even if the Rich will stop working, the money will still keep flowing into their bank accounts for the rest of their lives and even after that.
So if you want to become rich than give more importance to create and acquire assets.To become rich, you need to focus on growing the Asset column of your Financial Statement.By only saving lots of money, you can not become rich.Aim to become rich, you need to acquire assets out of your saved money.
One most common and age old financial advise in this world is - live below your means.It means that spend less than you earn money.Most of the people spend more than they earn by scratching credit cards and taking excessive bad audience like personal loans, car loans and shopping statement.And that ' s why finance gurus from all around the world teach their children to live below their means.They advise people to spend less than they earn.So that they can save more money.Purpose This Financial advise was actually once upon a time in this world means before 1971.Goal after 1971, this financial advise is no longer effective to ensure any kind of financial success in your life because USA has removed the Gold Standard (The Gold Back up to the dollars) in 1971.In fact, if today you follow this advise and save lots of money than you will surely be in financial trouble in the future.Because you are accumulating (Saving) Something (money) which is going to depreciate over the period of time because of the inflation.And that's why the Modern Financial Advise is - Don' t Live Below your means.Spend most of your money to create or acquire assets and grow your asset column so that in the future your Asset column generates passive income for you which can make you financially free and rich.
Asset is Always more Valuable than the money.
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