Assets vs Liabilities
Assets (noun)
a useful or valuable thing, person, or quality.
any tangible or intangible resource owned by an individual or business that is held to produce positive economic value.
Assets are things that you own, that have and hold value and/or, make you money. Having ownership of assets allows you to create generational wealth. Assets increase your net worth. It’s important to have ownership of:
Real Estate
Businesses
Investment portfolios with stocks, mutual funds, ETFs, etc.
Royalties
Patents
Commodities i.e Gold, Silver, etc.
Anything that maintains and increases in economic value
Liabilities (noun)
a thing for which someone is responsible, especially a debt or financial obligation.
Liabilities are expenses that cost you money. Expenses take away from the money you make. Expenses you may have to pay for include:
Rent/Mortgage
Cell phone bill
Car payment
Credit card payment(s)
Loans (personal, student, etc)
Net worth (noun)
the value of the assets a person or corporation owns, minus the liabilities they owe.
To keep it simple, your net worth is your assets minus your liabilities. Assets - Liabilities = Net Worth
The key to gaining wealth is to acquire assets and keep your liabilities low. More assets, less liabilities!