Acquire Assets

One of the key components to finding financial freedom is acquiring assets. Most people invest in mutual funds, annuities, ETF’s, Pension Funds, and etc. Most people though never ask the question “what is an asset?” We will be exploring this question.

What is an Asset?

Robert Kiysocki from the Rich Dad Company says it best when he says that assets put money into your pocket.

I have often said that assets do one of two things:

1. They create cash flow

2. They store your wealth

If an asset isn’t creating cash flow or storing your wealth then you do not have an asset. Liabilities take money out of your pocket. A good example of this is your house. If you are paying the mortgage, is your house really an asset? Some would say it is storing your wealth, but if your are paying out toward your mortgage, I would argue that it isn't an asset.

Is your mutual fund really creating cash flow for you or not? These are important questions for you to ask in your journey towards financial education.

There are many different types of asset classes. They are as follows:

1. Paper Assets

2. Commodities

3. Real Estate

4. Businesses

5. Bitcoin

Here are some questions to consider. You need to ask in each asset class if they either create cash flow or store value? Which are you looking to achieve? Do you want to preserve your wealth by storing your wealth in the asset or are you hoping to use the asset to create cash flow? You need to find which one you want or if you like both.