What is an asset? My father, an accountant, would say “property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.” Ok, probably not, I just copied the definition from google. This is what most people see as an asset. A home, car, tractor or tools would be assets.
I love the book Rich Dad Poor Dad by Robert Kiyosaki. I’ve probably listened to it 50 times. A big thing I got out of it is an asset as defined above is not an asset. To him an asset is something that makes more money than it cost you. I got to thinking about this because Donald Trump is running for president. Basically how Kiyosaki and Trump made all their money was in real estate. Rental properties or buying and selling property, most of the time the two in combination. They would purchase a property and rent it out for more than what the monthly mortgage and up keep costs are. When it was worth significantly more than what they could make on it they would sell it. Then repeat the process.
I tell all the young people who work for me to buy a duplex and rent out the other half to pay for the whole thing. It’s a great way to get cheap or free place to live and build equity.
I believe in future generations a job will not pay what it will cost to live comfortably and owning or building “real” assets will be the best way to thrive. This post is NOT about the minimum wage debate. If you don’t get paid enough quit and find a better way to make money.
Another story from Rich Dad Poor Dad is Kiyosaki’s first lesson from his rich dad. He worked for rich dad for $.10 an hour cleaning a 7 – 11 store and eventually got mad and wanted to meet with him to discuss a raise. The story of the meeting is long, but by the end he went back to work for free. Rich dad kept tapping the boys head and saying “think”. While cleaning at the store young Kiyosaki saw the manager cutting the cover off of unsold comic books keeping the cover and throwing the rest away. She got credit for the unsold comics from the distributor. He asked if he could have them. The clerk told him to talk to the distributor. Long story short he could keep the unsold comics if he didn’t sell them. He opened a library of comics and made a nickel from every kid who read them. He made $9 the first weekend which was 30 times what he made working at the store and more than some adults made at the time.
I guess our brains are the best “real” assets we have.