Why the Rich Get Richer and Richer
I have had conversations with many people about why the rich always seem to get richer, and why poor people seem to get poorer, no matter what life throws at them.
We have all seen rich people lose all of their money in a bad deal only to make it all back again in a short amount of time.
We have also seen poor people come into a great sum of money from winning the lotto or receiving an inheritance only to lose it all and go back to being poor.
If you want to be rich you need to understand what the rich do to make themselves richer and you need to do the same.
I am going to let you in on a few secrets of the rich and tell you why the rich always seem to get richer (even in an economic recession).
The Rich Buy Assets and The Poor Buy Liabilities There is a big difference between what is an asset and what is a liability.
If you go to a bank they will tell you that an asset is anything that you own that has some monetary value.
But the rich don't think like this.
The rich define an asset as something that puts money in your pocket and a liability is something that takes money out of your pocket.
For example, you car would be considered by a bank to be an asset because you could sell it for money.
However, by looking at the cash flow of your car you will see it is constantly taking money out of your pocket for petrol, maintenance, insurance and registration.
Your car is therefore not an asset, but it is a liability.
Rich people understand this concept of assets and liabilities and they purchase assets.
Rental real estate that brings in more rent than all your expenses combined is a great asset.
Stock and bonds that generate cash flow from dividends are also a great way to acquire assets.
Another asset you can acquire is a business that does not require your input and that runs by itself (either by computer automation or by hiring people to run it).
There are many assets that you can buy that will put money in your pocket every month.
The rich dedicate their money to purchasing assets that generate income, every time they purchase an asset their income goes up, giving them the ability to buy more assets quicker.
The more assets they buy the richer they become.
This is the main reason the rich get richer.
If you want to be rich you need to continually purchase assets instead of liabilities.
We have all seen rich people lose all of their money in a bad deal only to make it all back again in a short amount of time.
We have also seen poor people come into a great sum of money from winning the lotto or receiving an inheritance only to lose it all and go back to being poor.
If you want to be rich you need to understand what the rich do to make themselves richer and you need to do the same.
I am going to let you in on a few secrets of the rich and tell you why the rich always seem to get richer (even in an economic recession).
The Rich Buy Assets and The Poor Buy Liabilities There is a big difference between what is an asset and what is a liability.
If you go to a bank they will tell you that an asset is anything that you own that has some monetary value.
But the rich don't think like this.
The rich define an asset as something that puts money in your pocket and a liability is something that takes money out of your pocket.
For example, you car would be considered by a bank to be an asset because you could sell it for money.
However, by looking at the cash flow of your car you will see it is constantly taking money out of your pocket for petrol, maintenance, insurance and registration.
Your car is therefore not an asset, but it is a liability.
Rich people understand this concept of assets and liabilities and they purchase assets.
Rental real estate that brings in more rent than all your expenses combined is a great asset.
Stock and bonds that generate cash flow from dividends are also a great way to acquire assets.
Another asset you can acquire is a business that does not require your input and that runs by itself (either by computer automation or by hiring people to run it).
There are many assets that you can buy that will put money in your pocket every month.
The rich dedicate their money to purchasing assets that generate income, every time they purchase an asset their income goes up, giving them the ability to buy more assets quicker.
The more assets they buy the richer they become.
This is the main reason the rich get richer.
If you want to be rich you need to continually purchase assets instead of liabilities.