Assets put money in your pocket. Liabilities cost you money. The more assets you have making money for you, the richer you are. This is the fundamental rule of getting rich. But that said, here are 15 assets that are making the rich even richer.
Cash
Starting off at number one, cash—straight up cash put in a bank deposit is earning you interest. Pretty straightforward. The downside is though, the interest paid up by banks these days isn’t even keeping up with inflation. But cash is still a priority.
Apple, the company, has over $150 billion in cash reserves. That’s liquidity. So why do rich people still keep a good portion of their wealth in cash reserves?
Well, 2 reasons. One, being able to access any opportunity that presents itself, which is pretty self-explanatory. If you think about it, the deal of your dreams is in front of you and you don’t have the money to take advantage of it, that would suck. This is also the main reason why rich people save cash. And two, because they can get higher returns from straight cash deals.
Not only do people offer better pricing for cash, but you can also lend money with high interest. This practice is called peer-to-peer lending. If you’re low on income and willing to take this risk, there are plenty of platforms out there that offer peer-to-peer lending services. Basically, you lend people your money and they pay you back with interest.
The average bank is offering under 1% interest on your deposit, while peer-to-peer lending fluctuates from 7% to as high as 15% or 20%. But please keep in mind that if something is too good to be true, it probably is. Maintain a rational mind whenever investing.
Real Estate
This is a big one. We personally love real estate. Why? Once again, two reasons. One, rent payments—money is coming in every single month with a minimum amount of work. If you’re a bit smart, you can take advantage of the technology improvements happening right now and instead of traditional rents, do short-term rentals for higher yields. But it isn’t as passive. And 2, the second argument is appreciation. Population numbers are going up and more and more people need a place to live or rent. The demand is increasing, so prices for properties are constantly going up, and they forever will, making real estate one of the better investments that you could possibly make.
Now, in terms of real estate assets, you’ve got: one, residential buildings where people live in your properties and pay you rent; two, office buildings—people work in your property and they pay you rent; three, commercial buildings—businesses use your space to sell stuff and pay you rent; and four, land which can be cultivated, developed, or even left as it is for appreciation. Now, super important here—the house you live in is not an asset, okay? It’s a liability. It costs you money to live in it and it’s not putting any new money into your pocket.
Bonds
When governments or businesses might be in need of some cash, they can issue something called bonds, which are sold to interested investors.
Now, through these bonds, the government or business vows to pay the person buying the bond a certain amount of money every month.
Generally, bonds have an expiry date on them from 1 month to 30 years. These are super safe investments because they’re mostly backed by the government.
As you probably know by now, low risk in business translates to low reward as well. Bonds are usually in the 3% yearly return range, which is better than what most banks offer, but not high enough to get a beginner investor excited.
When the bond reaches its end, the principal amount is returned to the investor. The main ways that people buy bonds are: one, directly from the Treasury Department; or two, through a brokerage firm.
Stocks
Stocks are not as complicated as all those Wall Street films make you believe. Stocks are an easy way for you to own a percentage of a publicly traded business.
So, if a business issues 10 million shares and you own 1 million of those shares, you’re a 10% owner in that business. This incredible breakthrough in financial instruments has allowed the average person to own a stake in some of the most lucrative companies of our day, with very low entry barriers. Here’s how much you need to pay to purchase one share into these companies.
5Mutual & Index Funds
If stocks allow you to purchase shares in a company one by one, mutual and index funds bring multiple companies together, so you’re buying into the entire basket of companies as a whole. Why is this better? Well, basically, you’re more diversified, so it’s a safer investment to make. Statistically, index funds are one of the most best performing asset classes.
The 5 most popular index funds are the following, in no particular order: Fidelity Zero Large Cap Index, Vanguard S&P 500 ETF, SPDR S&P 500 ETF Trust, iShares Core S&P 500 ETF, and Schwab S&P 500 Index Fund. And look, okay, here’s the deal—if you were to start buying stocks one at a time, you’re statistically more likely to screw it up. You’re not going to be one of those miracle traders that beats the market year over year.
You don’t have that kind of info and it’s super complicated to try and compete with the big boys. That is where the index fund comes in. S&P 500 brings together the best 500 performing companies, and when a company falls from that top 500, it gets replaced with a new, better-performing one. The average annualized return for the S&P 500 index over the past 90 years is 9.8%. Out of the five mentioned, Vanguard is our top pick. Index funds should be in every portfolio of everyone who’s looking to build wealth long-term.
Equipment
Anything that generates money for you or helps you make money faster is considered an asset. If you’re a farmer, a tractor is an asset. If you’re a programmer, that laptop is an asset. If you’re an Uber driver, your car is an asset. Whether or not something is an asset or a liability changes depending on if it has a direct correlation to the money you are generating.
So, unless your income is directly dependent on the car, buying a new one is a liability. And it’s very often that people confuse the two. They try to justify it as an asset when in reality, they’re mismanaging their own finances due to a lack of self-control. You don’t need the most expensive laptop on the market to watch YouTube videos.
Patents
Patents are awesome. Okay, for those of you unfamiliar with the term, when you invent something new, you can protect that invention by filing a patent. It’s a document that certifies you as an inventor and describes in detail what your invention does. With this protection in place, companies have to pay you money in order to use your invention. And if they don’t, you get to sue them.
Patents are incredibly powerful and valuable in the business world. A single patent can make you rich, and all the best inventions are backed by patents. Just to put things into perspective, here’s the most U.S. patents received last year.
Trademarks
If patents protect your invention, trademarks protect your symbols, words, or phrases. It’s pretty obvious why this is a big deal when it comes to the logo or the name of a brand. But here’s where things get super interesting. If you own a valuable trademark that has marketable value, you can license it to people to use it for commercial purposes, and they have to pay you in return.
Our all-time favorite is the story of Michael Buffer, who in 1992 trademarked the catchphrase “Let’s get ready to rumble!” You can see it right now on the screen. I’m not going to say it, but chances are, you can hear it in your head. It’s super catchy, entertaining, and every single time it’s said in a commercial manner, you need to write Michael a check. And since trademarking it, get this, okay, he’s made over $400 million just from that one catchphrase.
Brand & Goodwill
Now, there are subtle differences between brand and goodwill, but both are very valuable to any business. A brand is the footprint a company leaves in the minds of its consumers, what they stand for, how they present themselves as being. Goodwill is the emotional affection people have towards the brand.
A brand is owned; it’s an effort the company is making to push a particular image of itself into the marketplace. Goodwill comes from the way the company treats its customers, the positive impact it has on the community, and how grateful people are that the company exists. Goodwill is super hard to cultivate or scale, but people will literally save companies from bankruptcy because of the goodwill they have for it. And there are companies that become incredible successes just through branding.
The Kardashian family is a great example here. If Kim or Kylie attach their name to something, it can drive sales like nobody’s business. We’re not sure if Kylie’s lip kits are any better than the competitions’, but it did make her a billionaire. Also, remember when Kim Kardashian made over a million dollars per minute from her Kimoji app? That was nuts.
Now, of course, there are other examples that might even drive this narrative better. Take a simple black t-shirt, for example. You can buy them for less than $2 a pop. But put a Disney logo on there, and now they’re worth $10.
At most that is. Now, if you buy a Calvin Klein t-shirt, you can expect to pay $40. Do you think people will pay that? What do you think?
Intellectual Property
This includes copyrights, trademarks, patents, and trade secrets. Intellectual property (IP) can be incredibly valuable because it protects creative and innovative ideas from being copied or used without permission. For example, a bestselling book, a hit song, a blockbuster movie—all of these rely on intellectual property rights to generate ongoing revenue through royalties and licensing fees.
Art and Collectibles
Artwork, collectible items (like rare coins or vintage cars), and antiques can appreciate in value over time. Many wealthy individuals invest in art not only for aesthetic enjoyment but also as a store of value and a potential source of profit. The art market can be volatile but has historically shown long-term growth, attracting both investors and collectors.
Cryptocurrency and Digital Assets
Cryptocurrencies like Bitcoin and Ethereum have gained significant attention as alternative investments. Their decentralized nature and potential for high returns have attracted investors seeking diversification and growth opportunities outside traditional financial markets. Beyond cryptocurrencies, digital assets can include digital art, virtual real estate, and other blockchain-based assets.
Businesses and Equity Investments
Owning equity in businesses or investing in startups can provide substantial returns if the company grows or is sold at a higher valuation. Successful entrepreneurs often reinvest their profits into new ventures or acquire stakes in promising startups, leveraging their expertise and capital to generate wealth.
Precious Metals
Gold, silver, platinum, and other precious metals have long been viewed as stores of value and hedges against inflation. Investors purchase physical metals or invest in precious metal ETFs and mining stocks to diversify their portfolios and protect against economic uncertainties.
Private Equity and Venture Capital
Investing in private companies or venture capital funds allows wealthy individuals to access high-growth opportunities and potentially earn substantial returns. Private equity investors provide capital to businesses in exchange for ownership stakes, often participating in management decisions and strategic initiatives.