Three Assets You Already Own
No, your house isn't one of them
Robert and I are all about simplification. We like making finances simple, which is why we've written several books and created multiple courses to help people understand the basics of the language of money.
One of the key principles we bring up over and over again is the difference between an asset and a liability. All other lessons hinge on understanding these two concepts.
For review, an asset is anything that increases in value over time, putting money into your pocket. A liability, on the other hand, decreases in value and takes money out of your pocket.
In the financial world, we talk about assets and liabilities in terms of money, cash flow, and capital gains. Assets are investments that give you high returns and grow in value, like stocks and real estate. Liabilities, on the other hand, are things you buy like cars, electronics, and yes, houses, that take your money and decrease in value.
Assets and liabilities can also exist outside the financial world, and the assets you already own are just as valuable as the financial investments you make.
When people start their financial journey, they immediately want to go out and start buying up financial assets. But they quickly run into problems, and start moaning:
"I can't afford to invest in assets."
"I don't know how to find assets. Where do I even start looking?"
"What kind of assets should I invest in? Where do I begin?"
What they don't realize is that you have to invest in yourself and the assets you already have before you can invest anywhere else.
Below are three assets you already own that you should invest in just as faithfully as your financial assets. They can bring you great returns and increase in value over time, and all they require is your attention and care.
This week on the Rich Dad Radio Show, we spoke about protecting yourself and your identity from cyber attacks. One of the key points I took away from this program is the idea that your identity is one of your greatest assets, and as such must be protected.
In this digital age, your identity is composed of an abundance of information you generate every day. It includes all the data coming from your digital devices, your finances, your social data, your healthcare data, your transportation data, even your legal data.
We spend our entire lives, every minute of every day, adding to and building our identity, and it helps us buy homes, apply for jobs, open new bank accounts, travel out of the country, and much more.
Unfortunately, most people don't realize how valuable their identity is as an asset until they have their identity stolen. When online hackers access your information, they can steal your information and use it for their own purposes, which can wreck your identity.
Once your information is stolen, an asset you once took for granted starts to prevent you from living your life. You might try to file a tax return and be blocked. You might turn on your computer and find all your information is deleted. You might attempt to get a mortgage, but find out there's already a mortgage in your name somewhere else. Medical treatments you knew nothing about start popping up on your insurance bill.
We work hard to craft an identity that will be an asset to us. We actively build our credit scores, pay our bills on time, protect our Social Security numbers, file our taxes correctly, and have all the right insurance in place.
With this asset, we are able to increase our value and move along our journey to financial freedom. Without it, we are prevented from accomplishing many important things in life.
That's why having the right protection in place for this particular asset is so important. Investing in this asset means taking the steps to ensure it is protected from hackers. Check out this week's Rich Dad Radio Show to learn more about how you can protect your identity.
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People often get uncomfortable when I start talking about relationships as assets. They don't like viewing their relationships as something they can utilize for their own benefit.
But that's the wrong way of thinking. Relationships are incredibly valuable assets. The world runs on relationships, and having relationships in place that help support you and allow you to grow is vital on your journey to financial independence.
Viewing relationships as assets doesn't mean viewing people as objects, or only befriending people in terms of how they can help you. But it does mean examining the relationships you have now and exploring how you can invest in them to make them valuable in many different ways over time.
Relationships with family, friends, mentors, business associates and colleagues, your boss and coworkers, even the people at your gym, can lead you places you never thought you would go. Take the time to invest in this asset, and the returns you receive will be exponential.
Robert wrote in Rich Dad, Poor Dad, "Your mind is your greatest asset, so be careful what you put into it." This quote remains as true today as it was 20 years ago.
Your mind is one of the only assets in the world that will never decrease in value. It has infinite returns, as you can always be improving your mind. You can always learn and grow and change your thoughts, which is incredible! There is no end point to the growth of your mind.
That's why at the Rich Dad Company, we view cultivating your mind and increasing your education as the first and most important step to achieving financial freedom.
Investing in this asset means increasing your education, learning new things, trying out new experiences, and taking the time to actively grow your knowledge. The best part is, in this day and age, investing in your mind is one of the few assets that doesn't have to cost you a dime. With the variety of online courses and free lectures available, you can invest in your mind every single day and benefit from the returns.
Invest in yourself first
You have to invest in yourself first before you can start investing in anything else. This is a lesson that few people seem to grasp. When people learn about assets and liabilities, they want to jump into a real estate deal or start buying up stocks and commodities, neglecting the valuable assets they already own.
The assets listed above can create a solid foundation for you that can allow you to succeed when you start investing in financial assets. Take some time to invest in them and watch how your financial journey becomes that much easier.