Accumulate Assets and Lower Liabilities to Build Wealth

It’s best to accumulate assets to build wealth and achieve financial independence. Too many people spend money on stuff that brings them temporary happiness instead of on assets that bring them permanent income. It’s easier than ever to buy assets these days, don’t let the opportunity slip you by.

The rich get richer not because they bring in more W-2 income than anyone else. It’s rather because they buy assets that bring them more passive income. They understand that accumulating assets take years, if not decades before it starts to bring in meaningful income to their lives.

When you accumulate assets, you are making your money work for you instead of the other way around. Money is the best employee you can ever have in your life. It doesn’t complain, it works while you sleep, and it works when you don’t even ask it to. It is highly submissive to what you want it to do.

However, when you don’t put your money to work, your money will work you. If you don’t make it your slave, it will quickly become your master. When you have to wait hand in foot for your money master, it will not be forgiving or understanding at all. It will not hesitate to put you to work as much as it can.

You don’t want to have that problem in your life. The true boss in your life is not your work boss. The true boss in your life is money that controls a large aspect of your life. How you can make that boss be your employee is by accumulating more assets until the cows come home.

Until one day you realize that you don’t need any more of it in your life.

What are Assets and Liabilities?

Asset is something that contains an economic value or a future benefit. Things such as houses, stocks, bonds, cash, and the like count as assets. However, there are “good assets” and there are “bad assets”. The good assets bring you more money over the long term in the form of value appreciation or cash flow.

Accumulate assets such as these.

The bad assets are depreciating assets that forces you to give up the value the more you use it in your life. Things like furniture, cars, clothes, shoes, and the like. These assets are helpful in that it helps you throughout your day to day life. However, these assets do not inherently appreciate in value to help you build wealth.

Cars are a very useful asset that people should have to build wealth. It transports you to your work so that you can earn income and provide for your family. However, it’s not an asset that will bring you wealth by itself. You need to use it to build something useful and meaningful. That’s the difference.

Liabilities are something that someone or a corporation owes to someone or something else. Like assets, there are “bad liabilities” and “good liabilities”. Good liabilities are something that brings you more money than the cost of the liability itself. For example, rental property mortgages or business loans.

Bad liabilities cost you money to hold and have in your possession. Things like credit card debt or personal loans to pay for vacations around the world. Knowing the difference between the two lets you figure out what to hold in your possession. The best action is to accumulate assets and pay down all liabilities, period.

It’s sometimes difficult to differentiate good and bad assets and liabilities.

Why Accumulate Assets and Lower Liabilities?

The most direct and simple answer why you should accumulate assets and lower liabilities is to build wealth. Wealth is what buys you freedom. The vast majority of people work a job because they have to, not because they want to. How great would it be for you to have a choice in going in to work?

To work because it gives you a feeling of accomplishment, purpose, and happiness? Warren Buffett tap dances to work every single day. He found a calling that brings him passion and joy in his life. He doesn’t have to answer to anybody because he accumulated so much assets throughout his life. Doesn’t that sound like the life?

That kind of lifestyle is not only for the rich and famous. The average joe with an average joe income can become a millionaire. If they want it badly enough and make choices to get there. It all starts with accumulating assets and lowering liabilities. Once you reach the status of “enough”, that’s when everything falls into place.

Everyone’s got a number that would lead them to quit their jobs tomorrow. Whatever your wealth number is, be completely honest with your money managing habits. Otherwise, you end up like these lottery winners who went bankrupt. What a shame it would be to have millions of dollars in your pocket only to vanish years later.

Although it helps prop up the economic activity of the country, it’s not great for you. Therefore, it’s essential to actually practice the good money managing habits through till the end. You don’t need the latest Lamborghini to keep you happy. That way, you create generational wealth that lasts forever.

Your family and your future self will thank you for it.

How Do You Accumulate More Assets?

One way to accumulate assets is to SMACK that social share button and sharing to your favorite social media! All of the likes and the relationships you build by sharing a value adding article are valuable social assets. If it’s not for the social assets, then please share the article for me. I try very hard to make sure my readers get richer every day.

It means a lot to me that my readers are sharing the articles and helping me bring even more articles!

So now, let’s get into how you can accumulate more assets in your life. The best part about it is that you do not need natural talent in order to accumulate assets into next generational wealth. All you need are behavioral characteristics that will get you there.

1) Earn More Money

The first and easiest way to accumulate assets is to earn more money. Have you been adding measurable value to your company for the past 1 – 2 years? It’s time to have a heart to heart with your boss. What are you doing well, what can you do to get to the next level of the career ladder?

Others are not going to manage your career for you, you’re going to have to manage your career yourself. Take the initiative and demonstrate to your boss why you deserve to get to the next step up. Companies are very slow to give out promotions, even if the employee deserves it sooner.

Every year that you get underpaid is more bonus that shows up in the executives’ pockets. Don’t let them get rich at your expense. Get rich at their expense. Your W-2 income will take up the highest percentage of your earnings in the beginning. The idea is for your assets to outpace your W-2 income afterwards.

2) Save and Invest More Money

Now that you earned more money, it’s time to accumulate assets with your higher earnings. You do that by saving and investing as much as you possibly can. This is after putting in a cushion for miscellaneous and fun money budget.

You don’t want to sacrifice your fun money budget just to get to financial independence a couple of weeks earlier. It’s not a long term and sustainable solution. Anyway, you should be saving and investing your money into income producing and/or appreciating assets that earn you more money.

Personally, my favorite asset class will be the stock market and it will always be the stock market. Not only do I save and invest through a 401(k), I save and invest as much after-tax money onto my brokerage accounts as well. After I take care of my essential expenses and fun budget, I aggressively save and invest.

That’s what allowed me to have a very good net worth in my 20’s. I can’t wait to see what the future holds after.

3) Look for Additional Income Sources

After you maxed out your W-2 earnings from your employer, it’s time to diversify and look for additional income sources. It can be through having an online blog that generates passive income. Or it could be by starting a lawn mowing service for your neighborhood. Whatever the case is, it’s time to look for additional income sources.

You realistically have 32 hours a week on the weekends to spend time generating additional sources of income. That’s a large amount of time. That’s almost another full time job you can have in just two days. Even if you want to spend a majority of that on relaxing and fun, that’s still an extra 10 hours per week you can contribute towards work.

Side hustles are more prevalent than ever these days. It’s easier than ever to start one because of the rise of the internet. Figure out ways to earn more money so you can repeat the second step to save and invest more money. That’s how you endlessly accumulate assets that pay you more money. It only snowballs from there.

Good Assets to Accumulate that Generate Income

I will not list every single good asset class you should invest in to generate income. There are hundreds of asset classes to name. However, I will name three good asset classes that has been tried and true, historically. Do they have a chance of it not working out in the future? Absolutely.

However, I prefer not to bet against proven asset classes that have a great potential to make me more money and subsequently, rich. The proven way is the best way to consistently perform well, so why do anything about it even if the results aren’t guaranteed?

1) Stocks

By far, my number one favorite asset class to build wealth is stocks. When you think to accumulate assets, stocks should be at the top of the list. There is an endless “stocks vs real estate” battle that will go on until the end of time. I’m personally in the stocks camp because it’s made me so much money than I ever anticipated or expected.

Ever since I graduated college, I contributed as much money as I can to 401(k) and invest in the S&P 500. I have absolutely zero regrets of doing that at all. I would have done it again in a heartbeat. My 401(k) balance blows the water out of any of my friends. And I have friends who earn double my income as a DINK.

Stocks are a phenomenal, proven asset class to accumulate. The next 40 years may look different than historical 40 years but I expect the 41st year level to be higher than where it is today. Is there a chance it may not be? Yes. But I believe that it will more than likely be. Feel free to check back with me after.

2) Real Estate

Real estate investing also consistently provided wealth to millions of people in the country. Accumulate assets in real estate as well because it’s much easier to use leverage than on stocks. Not only is your tenants supposed to theoretically pay for the house, you get the appreciation from it as well. Not to mention the tax benefits.

My family personally owns three properties that they rent out to produce income. I personally haven’t dabbled in buying physical, real assets yet but I know I will get on it at some point. I personally do not like the active income side of real estate. It’s not just pressing a button like with stocks.

You have to find a good deal, run the numbers, negotiate pricing, find a good bank, find good tenants, and constantly find good tenants thereafter if there’s turnover. However, for those who are not allergic to hard work like me, it’s a great asset class. When you buy the right real estate at the right location, magic happens.

3) Online Businesses

I personally believe blogging and creating a popular Youtube channel is the best online business you can get into today. By far. The startup costs are very low. Did you know that there’s a Youtuber named Milad who just posts videos talking while making Subway sandwiches? He has a million+ subscribers.

For just talking and making sandwiches. That’s insane. There’s so many innovative ways to influence people these days. You don’t need to be a celebrity. You can be the average person making sandwiches from Subway and just talk. Anyone can do that. You can easily use the video from an iPhone camera to get messages out there.

Be a price setter, do not be a price taker. Create content that adds value to people’s lives. Don’t be a consumer of content that is dependent on others for entertainment. It’s not bad to be a consumer of content as long as you are producing content as well. Or at the very least, using the content to your advantage.

Accumulate Assets Towards Financial Independence

When you accumulate assets is when you accelerate your path to financial independence. Financial independence is filled with unicorns and rainbows where you dictate how you want to spend your time. You no longer have to hang out with people you don’t like or respect. You can do whatever you want and avoid whatever you don’t want.

It all starts with the first dollar invested in good asset classes. Whether it’s stocks, real estate, or an online business, it’s up to you to take the first step and action. The first couple of years does not feel meaningful. Honestly, that’s when you are most likely to quit and give up.

You will question why you are sacrificing so much in exchange for so little, especially when your happiness means a lot to you. I admit that I felt powerless every paycheck. All of the money went to rent and paying off credit cards. I felt trapped and contained in a cage with no way out.

However, when you patiently accumulate assets anyway and trust the process is when a whole world opens up to you. Even if a lot of my wealth sits on paper, I am happy with it. I can cash out those assets any time that I wish because it is highly liquid.

Diligently, consistently, and patiently accumulate assets until one day you thank your past self. If you can’t thank your past self for your financial life today, then it’s time to make some changes. Save and invest more money than you ever thought you could save. Sacrifice and cut back a little today for a better tomorrow.

Even if you don’t understand the benefits today, in ten years you will.