Do you want to achieve financial freedom and build wealth? If so, you need to invest in assets that generate income and appreciate in value over time. In this blog, I will share with you four types of assets that can make you rich, according to Robert Kiyosaki, the author of the best-selling book Rich Dad, Poor Dad.
What are Assets?
Before we dive into the four assets that make you rich, let’s first define what an asset is. An asset is anything that puts money in your pocket, regardless of whether you work or not. It is something that you own that produces cash flow, income, or profits.
On the other hand, a liability is anything that takes money out of your pocket, such as expenses, debts, or taxes. A liability is something that you owe that costs you money, time, or energy.
The key to becoming rich is to accumulate more assets than liabilities, and to use the income from your assets to buy more assets. This way, you can create a positive feedback loop that increases your wealth exponentially.
4 Types of Assets That Make You Rich
According to Robert Kiyosaki, there are four types of assets that make you rich. They are:
– Business
– Real estate
– Paper assets
– Commodities
Let’s look at each of them in more detail.
Business
A business is an asset that you create or buy that provides a product or service to customers. A business can generate income for you in two ways: by selling the product or service, and by increasing the value of the business itself.
A business is a great asset to have because it can leverage other people’s time, money, and skills. You can hire employees, borrow money, or partner with other businesses to grow your business faster and more efficiently. You can also automate, outsource, or systematize your business processes to reduce your involvement and increase your profits.
Some examples of businesses that you can start or buy are:
– Online businesses, such as e-commerce, blogging, podcasting, or affiliate marketing
– Franchises, such as fast-food, retail, or service-based businesses
– Traditional businesses, such as manufacturing, consulting, or education
To succeed in business, you need to have a clear vision, a unique value proposition, a competitive advantage, and a loyal customer base. You also need to manage your cash flow, expenses, taxes, and risks effectively.
Real Estate
Real estate is an asset that you buy or control that consists of land and anything attached to it, such as buildings, structures, or natural resources. Real estate can generate income for you in three ways: by renting it out, by selling it for a higher price, and by refinancing it for a lower interest rate.
Real estate is a powerful asset to have because it can appreciate in value over time, provide tax benefits, and create passive income. You can also use leverage, depreciation, or inflation to increase your returns on real estate.
Some examples of real estate that you can invest in are:
– Residential properties, such as single-family homes, apartments, or condos
– Commercial properties, such as office buildings, warehouses, or shopping malls
– Industrial properties, such as factories, mines, or farms
To succeed in real estate, you need to have a good location, a good deal, a good team, and a good strategy. You also need to analyze the market, the property, the cash flow, and the exit plan carefully.
Paper Assets
Paper assets are assets that you buy or sell that represent a claim on something else, such as a company, a government, or a commodity. Paper assets can generate income for you in two ways: by paying dividends or interest, and by increasing in value or price.
Paper assets are convenient assets to have because they are easy to buy, sell, or trade. They are also highly liquid, meaning that you can convert them into cash quickly and easily. You can also diversify your portfolio, hedge your risks, or speculate on future trends with paper assets.
Some examples of paper assets that you can invest in are:
– Stocks, which are shares of ownership in a company
– Bonds, which are loans to a company or a government
– Mutual funds, which are collections of stocks, bonds, or other assets
– Exchange-traded funds (ETFs), which are funds that track an index, a sector, or a commodity
– Options, which are contracts that give you the right to buy or sell an asset at a certain price and time
To succeed in paper assets, you need to have a good knowledge, a good broker, a good system, and a good discipline. You also need to research the asset, the industry, the economy, and the market thoroughly.
Commodities
Commodities are assets that you buy or sell that are raw materials or natural resources that are used to produce other goods or services. Commodities can generate income for you in two ways: by selling them for a higher price, and by storing them for future use.
Commodities are valuable assets to have because they are scarce, essential, and durable. They are also inflation-resistant, meaning that they tend to increase in value when the general price level rises. You can also use commodities to hedge your risks, diversify your portfolio, or speculate on supply and demand factors.
Some examples of commodities that you can invest in are:
– Metals, such as gold, silver, copper, or platinum
– Energy, such as oil, gas, coal, or uranium
– Agriculture, such as corn, wheat, soybeans, or coffee
– Livestock, such as cattle, hogs, or poultry
To succeed in commodities, you need to have a good timing, a good storage, a good delivery, and a good contract. You also need to monitor the weather, the geopolitics, the regulations, and the cycles carefully.
Conclusion
These are the four types of assets that can make you rich, according to Robert Kiyosaki. By investing in these assets, you can create multiple streams of income, increase your net worth, and achieve financial freedom.
However, investing in these assets is not without risk. You need to educate yourself, do your due diligence, and take calculated risks. You also need to have a clear goal, a realistic plan, and a consistent action.
Remember, the rich don’t work for money, they make money work for them. If you want to be rich, you need to think like the rich, and invest like the rich.
What are you waiting for? Start building your asset portfolio today, and enjoy the rewards tomorrow.