I’m not trying to tell you to put your life’s savings into art or chainsaws I’m simply making the point that businesses and real estate aren’t the only assets in the world. I also knew a guy that bought and sold chainsaws (he would buy broken ones, fix them up, and sell them at a premium). For example, if you are an art connoisseur, you can buy and sell art. However, there are other assets that you can purchase if you know what you’re doing. Other Assetsīusinesses and real estate have proven to work well for many people and are easy to buy and sell. Like a stock, you can buy little pieces of a REIT, and over time they provide additional value in the form of growth and dividends. You can buy this on the stock market as well. Of course, you can purchase a home or a rental property, but you can also buy pieces of a lot of real estate in what is known as a Real Estate Investment Trust or REIT. You buy little pieces of stocks, and over time they provide additional value in the form of growth and dividends. What is the name of this magical marketplace? It’s called the stock market. You can be a partial owner of a business, and in turn, you get to share in the business’s profits and growth. There’s this magical marketplace where people sell pieces of businesses. History has proved that the best assets for producing millionaires are businesses and real estate. One of the easiest and simplest ways to become a millionaire is to simply buy assets.
#SHOCKINGLY SIMPLE MATH HOW TO#
Ok, now that we’ve cleared up some definitions and you understand what assets are, let’s talk about why you’re really here– to learn how to become a millionaire. Eventually, once you pay your home off, you will no longer have that liability, and it will only be an asset to you.Īs a general rule, assets add to your net worth, and liabilities take away from your net worth because you usually have to pay interest on debt. As you make payments on your home, your liability will go down. You also have a liability of $450,000 ($500,000-$50,000) because that’s how much you owe to the lender. If you buy a $500,000 home and put $50,000 down, then you have an asset in the form of a $500,000 house. And one item can be both an asset and a liability. Most people have a mixture of assets and liabilities. If you buy something and plan to pay it back later, you are taking on a liability. Liability: A liability is basically a fancy word for debt. Common assets for the average person include their home, car, retirement accounts, stocks, bonds, and cash. If you didn’t go to business school or have the pleasure (yes, I say that with 100% sarcasm) of taking accounting classes, you may not understand terms like assets and liabilities (I sure as hell didn’t), so here’s a quick overview.Īsset: An asset is a resource of value that an individual owns or controls with the expectation that it will provide a future benefit. Personal net worth is the total wealth of an individual or household, considering all financial assets and liabilities. You may or may not have other things people consider “nice” or “fancy.” What is net worth? As much as the media portrays millionaires and rich people with the finer things in life, technically, you need to have $1 million in net worth to be considered a millionaire. To be clear, being a millionaire doesn’t mean you drive a fancy car or have a $7-million home.
Here’s the shockingly simple way to become a millionaire that everyone should know. So a few years ago, I decided to figure out exactly what it would take to become a millionaire. Most people dream of becoming a millionaire “one day,” but few actually make it happen.
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