Real wealth building begins once you are out of debt. Believe me living debt free is the best thing you can do. A lot of financial gurus will tell you to borrow money to build assets, using other’s people’s money. I don’t agree. Most people do not have the financial expertise to fully understand the down side to borrowing money to build assets. Just ask all the people who borrowed to buy real estate as an investment and now are losing their properties.
An investor defines an asset differently from a lender. To investors, an asset produces income or its earnings are reinvested and increase in value. A lender defines an asset as anything you own, such as equity in your home. Liabilities to an investor are things that produce negative cash flow.
That is why your home is actually a liability. Your goal is to minimize the cost as much as possible. Once your home is paid off, you still have taxes, insurance, utility costs, and maintenance costs.
The lender considers your home an asset because it is generating income for him!
Paying off a debt early is like getting a return on that money.
So what type of assets should you be looking for? It has a lot to do with your tolerance for risk. There is an abundance of books, videos, and websites available that discuss mutual funds, real estate, and all types of businesses.
If you look at the stock market it is not hard to see that the so called experts have no clue either. To me the stock market is like going to Las Vegas. The house has all the upside. My opinion.
Real estate? A lot of people have become millionaires in real estate and some still do and will do. For me, I don’t have the patience for this.
My choice is building businesses and leveraging the power of people. More to come!
Jacques
CreatingWealthThatLasts
1 comment:
Hello Jacques,
That for the great information that helps us to look more closely at what is real wealth and building it in the best way possible. Out of debt. Thank you.
Dan and Deanna "Marketing Unscrambled"
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