Is it true that money makes the rich?, or maybe it could be asset?, hope you'll not be too surprised if I said neither of the independent both?. Let me emphasize on pure business and finance in today's article.
Poverty basically sprouts from the lack of knowledge; in this context you have to see knowledge as the exposure to facts, not just what the masses say. We all know the masses at most times are under what is mostly termed 'herds behavior'. Truth be told, a lot of things and courses we take in life never really mattered, just us letting the 'what will people say' everyday statement ruin much of our decisions. That said, let's have a real look at money and assets and how it correlates to generate wealth.
Just came to realize asset is not wealth, nor money. A man can have an asset worth millions yet is still struggling financially. If you think it's a joke, you'll soon find out. The first question to pinpoint should be 'what is an asset?' In my simple definition I will say what generates more money or increases your assets, the aim of an asset is to promote financial freedom. Why am I saying 50% money and 50% assets?Does this mean money is not an asset?
From my personal view, an asset is known to appreciate in value and we all know how inflation has proven this otherwise when it comes to fiat currency. I have seen people with assets still in poverty and have also seen people with money also taking the same poverty course. The secret is their lack of financial intelligence, little to no exposure as I had earlier said.
Let's learn from a story of a man who had $1 million dollars worth of land. After going through the normal schooling system, things didn't work out as expected. He has been through a lot of debtin the process to live a comfortable life, not actually an overspender. Fortunately for him, he was handed over properties after his father's demise, the most valuable being the $1 million dollar worth land. Can you say he is now rich? Remember he is in debt, let's say 20% of what the land is worth. How does he crawl out from here? He has an asset yet no money. As long as that land remains there with no business upon it, he still remains poor.
You need money to make wealth
The truth is from the general definition of money, 'a thing accepted as medium of exchange' you'll definitely need it to make wealth. Don't be surprised he can get into debt worth half that land's worth in the next one year without him getting the needed finance to move business. You could be stuck with an asset with nothing to write home about. Getting the true value off an asset needs finance to put it to the needed standard in other to get returns upon your investment.
Should he in the process sell the asset? Yes I must say if it's partially done and no if it's entirely. Selling off the whole asset for money is even more deterring as he may eventually use it to pay off debt and perhaps enter into one or two shallow investmentand we all know how this always ends; bankruptcy.
You need asset to move money
Why do the rich own businesses? It has proven to be a lucrative channel to move money and more returns in the process. As I earlier said, a partial sale. 50% asset and 50% money is the key. How to get this done depends on how willing he is to expose himself. We need to come to that understanding that money is passed through an asset to generate more money and more assets. It is the secret of compounding.
His ability to raise funds and build an investment around that asset goes a very long way. Just like owning a chicken poultry; you feed the chicken, it lays the eggs. I was always surprised when I see people with assets especially remain broke. Inability to utilize an asset to its full potential leads to an unhealthy financial journey. After my research I came up with this wise financial quote "100% money in your pocket, you are poor; 100% asset in your custody you are still poor; 50% money 50% asset then you have a high chance of financial freedom"----dani-asi.
I guess we all have to revisit our drawing boards, a lot of us have missed it somewhere here. When I talk about assets, it goes beyond physical properties, an idea( maybe an invention) needs that financial backup. Your ability to tear it around investors will go a long way or it may start as a dream and die as a dream.
To conclude, let me say there is a need to strike a balance between assets and money. They need to walk hand in hand to generate tangible results. We are living in a world where trillions of transactions occur on a daily basis. Why a lot don't benefit from these transactions is the lack of channels to process the currencies, this needs financial intelligence.