Building an Asset Column
There were three events that greatly impacted my financial life. This is part two of three, where I will be writing about asset columns. The main idea is to buy income producing assets that generate perennial money over time.
I first came across this concept when reading the 1997 book Rich Dad Poor Dad, by Robert Kiyosaki. The book primarily focuses on real estate. But stocks and bonds can also be included in an asset column. 🙂
The book that changed my outlook on money
I picked up Rich Dad Poor Dad when I was 17 after a friend suggested it to me. Many of the concepts Robert discussed in the book such as taxes, inflation, and hard assets were completely new to me. But what fascinated me the most was the idea of financial independence. And also how to build wealth through investing in assets.
This was the first time I witnessed concrete examples of how to take actional steps to create a “column” of financial assets. A properly constructed asset column should grow by itself over time.
From learning about compound interest earlier that year I already knew how to make time work for me. And now thanks to Robert’s book, I learned how to get money to work for me. The two concepts combined lead to a breakthrough moment in my financial education. 😀 It completely changed my perspective about money.
Accumulate all the assets
Before I had thought of money as something people earn and spend in order to live. The idea of retiring early or becoming a multi-millionaire had never occured to me. But after reading the book, I began to see money from a completely different angle – one that involves assets and liabilities. I learned money isn’t only good for spending. It’s also good for generating more money. The poor and the middle class work for money. But the rich have money work for them. Robert explains how to multiply your investment returns with a fancy strategy call leverage. 😉
I learned that the rich buy assets first. Then use the income generated from their asset column to buy wants and luxuries. Their lifestyle is funded by money working for them. Meanwhile the poor and middle class tend to buy luxuries first and don’t have much in terms of assets. So their lifestyle is funded by their own “sweat, blood, and children’s inheritance.”