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In This Video:

0:22 What Is A True Asset?
02:26 What Are Real Assets?

 

Hi there Daimien here again and today’s blog video is going to be the first in a series of videos that I am going to call “What You Were Taught Wrong at School About Investing.” Today is all about “What an asset is”.

 

What Is A True Asset?

So, when we are growing up, we are learning about money from those around us. We end up getting taught incorrectly what a true asset is. We go to the bank to get a loan, and the banks ask us to list what are assets are and what are liabilities are.  Anything that value like your car, your home in contents we list those things as assets. Anything like loan, credit card, we list them as liabilities. The problem is, when it comes to our wealth creation, we are actually been seriously misled.

First thing that you must understand is the true asset is what you need if you want to be financially free but what the true asset is? The true asset is something that puts money in your bank account without you having to work. Now, that asset might have liabilities that you have to be paid, but its income is more than the liabilities, therefore you end up in front.

Now, lot of people believe that their own home is their most valuable asset but guess what? That is wrong! Your home is a liability. The place you live in is a liability even if you are mortgage free, you still have to pay rates, you still have to pay maintenance cost, you still have to pay insurance, and you receive no income from that property.  Yes, you might get some property growth, but you can’t spend that money, because you need to live in that property.

 

What Are Real Assets?

Conversely, an investment property is entirely different “kettle of fish”.  An investment property if it is positively geared, after tax you end up with more money in your bank account.  That is an asset. It is a real asset. Why?  Because not only it will go up in capital growth like your house will but it’s also bringing a rent and also bringing a tax return which your house will not do.

Therefore, there is a very clear difference between what your home is and what an investment property is. Now if you want to retire early, you need to have a passive income and only way you will get a passive income is by owning real assets. Remember what a real asset is. A real asset is something of value that leaves money in your bank account only when you got then, will you be able to start replacing your income and then not having to work anymore. If you want to be financially free, then you need to be acquiring real assets.

Ask yourself this question. How many real assets did you own right now? If you are not happy with that answer, then come and see us and let us hlep you get on the path in the right direction.

Until next time, that’s it for me today. Cheers.

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