Tuesday, August 25, 2009

#5 Buy Assets Not Liabilities

This is the #5 posting to the Road to Financial Freedom, a simple 10 step mini-series to get one started on the road to financial freedom.

This is a lesson that I learnt from the Rich Dad Poor Dad series which has helped changed the way I "spend" my money. The lesson is simply this. Buy assets not liabiliities.

To understand this, you first need to understand what is an Asset and what is a Liability as Robert Kiyosaki puts it.

An asset is simply something that puts money into your pocket and a liability is something that takes money out of your pocket.

A house which you stay in is thus a liability as it takes out money from your pocket whereas a house that you are renting out for a profit is an asset as it puts money into your pocket. Simple isn't it?

So the guide here is to always buy assets instead of liabilities.

Thinking of buying that car? Think again unless you are going to use that car to do goods transportation or something to earn a living.

The Road to Financial Freedom
#1 - The Greatest Mistake
#2 - Protect What You Cannot Afford to Lose
#3 - Spend Less Than You Earn
#4 - Spend Less Or Earn More
#5 - Buy Assets Not Liabilities
#6 - Read and Learn More
#7 - The Magic of Part Time
#8 - Health Equals Wealth
#9 - It's a Marathon, Not a Sprint

3 comments:

  1. Hi FF,

    I enjoy this series so far, please keep it up !

    Cheers,
    Musicwhiz

    ReplyDelete
  2. Great informative site. I'm really impressed after reading this blog post. I really appreciate the time and effort you spend to share this with us!
    what is an llc

    ReplyDelete

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