Picture this: you are the head of your own company. the big cheeze, the BOSS. you have hundreds of employees, and you sell a good or service that just rakes in the doe. Wouldn’t that be the life? What if I told you that you could reap all of those benefits without ever hiring a single soul, without ever leaving your current gig? well follow me along this journey as I explain the power of assets in one’s life.
the definition of an asset as per www.investopedia.com: An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. What this could look like to the everyday citizen is:
Examples of Assets
- a house
- a car
- a tennis raquet
- a lawn mower
- 3D printer.
as you can decipher, some of the assets listed are simply items that we own which retain a certain value for a period of time. Others can be considered revenue generating assets because you might be able to use their function or ability to create value in a good or service. This is generally what a company does. for example, Joe’s landscaping takes a lawn mower and uses it for 8 hours and generates $100 of revenue. the lawnmower became a revenue generating asset. catch my drift?
along this line of thought, I will now try to make a point in a business context. Lets imagine we have $1 on hand, and that $1 is actually an imaginary employee named Ben. Ben’s job is to create a little bit of value every day like the lawn mower does. The thing with Ben is, he generates a pretty small amount of value each and every day, but Ben’s REALLY IMPORTANT ADVANTAGE is, he can create that value autonomously without any input from you. Sure Ben needs to be guided once and a while, but if Ben is in the right cubicle, he can confidently add value every day.
Making it count
Now you’re probably saying ”I ain’t going very far on $1 Ben!” and you would be very right! But what if we got Ben and oh say, 100,000 of his friends together for a team effort? All of sudden Ben and his $100,000 friends are generating $5,000 of value every year. What if you made it to $1,000,000, all of a sudden you are generating $50,000 a year in profit. and all this is over and above your regular day job. So now, not only are you using your own assets (skillset, experience) to earn income, you are using other assets (cash, investments, savings) to earn additional income. this is the concept of a revenue generating asset. in my opinion: the most important rule of investing is: let your money work hard for you, then you won’t have to work hard for your money! If that isn’t trademarked already, I will get right on that paperwork!
So, moral of the story: it is a GOOD IDEA to save up some money from your day job or whatever source of income you have. Put as much of that money to work for you with a financial advisor, in the stock market or any other investment bucket and let that money work for you. It probably won’t provide you with any immediate gratification as say the purchase of a new toy would, but after days, months and years of good investment discipline and all of a sudden you are generating thousands of $$$ of profit per year which you will thank yourself for in the future.