The disparity between the rich and the poor is growing at a much faster pace today than any other time in history. We no longer need to use our laborious bodies to accrue money. With the advent of the Internet, we can virtually become millionaires from anywhere in the world, even from our own home.
The gap between the two is growing because of the opportunities that people see or don’t see. Many people are given the same chances – but the majority of us see no opportunities, while at the same time the financial savvy see innumerable ones.
These opportunities are abundant and everywhere; we just have to be trained to see them for what they are and not worse than they are, like most do.
Watch Video Below: The Rich Love Assets and Passive Income
Robert Kiyosaki’s book, Rich Dad Poor Dad, offers insights on how to accrue money from any age and from any background, if we would only change our thinking. We are what we think about, and if we think from the perspective of a poor or middle-class person, thinking we have no chances of success, we are setting ourselves up for failure.
The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant.
The Power of Finding Assets
The first aspect every rich person understands, maybe the quintessential truth, is the difference between an asset and a liability. If you look up those words in the dictionary, you will most likely get a verbose definition.
But here at theeccentricmind, we keep things simple.
An asset is something that puts money in your pocket.
A liability is something that takes money out of your pocket.
Understand this, and your life will flourish. Do not believe that your house, car, clothes, or things of that nature are assets. They take money out of your pocket.
To name a few, assets can come from book sales, rental properties, stocks, bonds, and affiliate marketing. Assets make money when your not directly work on them.
But it is not enough to know this. You must understand how the rich use them versus the poor and the middle class. The poor and the middle class tend to spend their money on liabilities as soon as they are paid, or save their money, which is often not that financially smart due to inflation.
The rich know that if they are going to buy a liability (car, house, clothes, etc.) they need to first invest in an asset to give them that money. For instance, they would invest in a property to then sell rent to gain passive income, only then will they buy the liability.
They have “passive income” for life, until they feel the need to sell it, which they might do for “portfolio income” – or capital gains.
The poor use money to buy liabilities.
The rich use their money to buy assets that buy their liabilities.
The Three Incomes – Passive Income Will Change Your Life
Now that you understand the difference between an asset and a liability, you have to understand what the different type of incomes.
Ordinary income – Paycheck money (often taxed 30-50%)
Portfolio income – Capital gains (taxed less than 20%)
Passive income – Residual income (often taxes less than 10%, a lot of times 0%)
Most people only know about the first type of income. They work hard for money, instead of money working hard for them; they trade their time for money.
The more they work for this type of ordinary income, the more they are taxed. Their expenses tend to increase in proportion to their salary. They are in the “Rat Race”. The day they stop working, they will fail to make an income or a living.
That is why the rich work hard for ordinary income at first, only to invest that money into portfolio and passive income. By investing in the other types of income, you will be taxed less, and you will be able to follow your passion by making money regardless of what you do.
A quote for Rich Dad Poor Dad I believe to be in order:
The key to becoming wealthy is the ability to convert ordinary income into passive income or portfolio income as quickly as possible.
Have the Right Mindset
The rich have a different mindset about money. They view it as an idea, not something tangible. They see the abundance of opportunities that financial education can breed. They look at money as the medium to do what they want, instead of looking at it as elusive and hard-to-get.
The rich know their priorities. They focus their time on things of pertinence; they rather read books, attend seminars, enroll in classes and gain real world experience than watch TV, or partake in something as mind-numbing as the former.
If you are brand new to financial education, do not worry. The fact that you want to learn makes you ahead of most people in this world.
These concepts will only get easier as you read more about them, but especially when you implement them. I encourage you to read more and then to teach others. The best way to learn is by doing or teaching.
It is to my dismay that the educational system doesn’t teach this type of education. I don’t blame them though, the rich own the system and why would they want to increase their competition?
They do not want people knowing that with a change of mindset, they will be able to make money easier than what conventional wisdom dictates. Passive income is the key to a better life.
Remember, the first time you make passive/portfolio income will be the most grueling, the hardest, but also the most gratifying.
It only becomes easier as you practice. Take action.