Assets are important in the real world of building wealth. When you have an asset, then it makes you money; on the other hand, liabilities make money from you.
The wealth-generating assets include those that can give returns through various forms. Among these, some are in cash, real estate, patents, or unique rights that the rich make use of for continuous wealth accumulation.
Here are 15 examples of such wealth-generating assets.
1. Cash
Earning Interest: Although interest rates on bank deposits are low, cash is still a valuable asset. It can be used to provide liquidity for opportunities and can earn higher returns through peer-to-peer lending (7%-20% returns).
2. Real Estate
Rent Payments: Properties can generate steady monthly income, especially with the rise of short-term rentals.
Appreciation: Property values appreciate as the population grows and demand for housing increases.
3. Bonds
Safe Investment: Bonds offer low-risk, low-reward returns, in the range of 3% a year, or much more stable long-term investment.
From Governments/Businesses: Bonds can be found through treasuries or brokerages, so it is easy to anticipate what returns are probably going to be reaped.
4. Stocks
Ownership in Companies: Stocks give you ownership in an enterprise and potential upside from improved business performance.
Low Entry Barriers: Stocks are accessible to the common person; shares can be bought on the stock exchange.
5. Mutual and Index Funds
Diversification: These funds pull in different companies’ investments, so the risk is spread out through various investments.
Better Long-Term Performance: Index funds like the S&P 500 have historically given a very good return, about 9.98% annually.
6. Equipment
Earning Tools: Equipment such as a tractor for a farmer or a car for an Uber driver can be used to generate income by facilitating work or production.
7. Patents
IP: A patent can only be used by its owner and is a potential money earner from licensing.
Examples of Successful Patents: Idea for the Slinky or Big Mouth Belly Bass can sell millions.
8. Trademarks
Brand Protection: Trademarked names, logos, or words prevent others from using them; also a good money earner on licensing.
Example: Michael Buffer trademarked “Let’s Get Ready to Rumble” and takes home over $400 million.
9. Brand and Goodwill
Brand Value: A good brand and good will may enable a company to command a premium price due to the loyalty of the customers and recognition.
Examples: The brand for Kardashian and Disney shows how strong a brand can be in wealth creation.
10. People
Bringing the Right Talent: people often happen to be the biggest asset of a company and are also the most innovative one that drives growth of business. The right team can also turn a business a hit.
11. Raw Materials and Commodities
Fluctuating Market Prices: Oil, gold, and art are commodities where the low prices can be purchased and sold at high prices once the demand increases, giving a tremendous potential for profits.
Examples: Art has outperformed the S&P 500 in the past 20 years, while vintage cars have appreciated in value.
12. Books, Songs, Digital Courses, Information
Scalable Content: Once created, content such as books, songs, or online courses can be sold repeatedly, making it an excellent asset for long-term passive income.
Examples: Songs like “Gangnam Style” and Mariah Carey’s “All I Want for Christmas” generate continuous royalties.
13. Royalties
Income from Licensing: Creators can earn royalties by licensing their intellectual property, such as books, TV shows, or music.
Examples: Friends remains to make millions in syndication, and George Lucas made billions in Star Wars merchandise.
14. Exclusive Rights
Advantageous Competitive Position: Rights such as tax-exempt status for churches or the exclusive rights to play certain games for Native Americans can offer strong business advantages.
Examples: Tax-exempt status for churches and unique gambling rights offer a business financial advantage to some.
15. First Mover Advantage and Proprietary Business Models
Innovative Market Position: Early innovations, such as the Apple App Store or Netflix’s streaming service, allowed companies to dominate industries and build valuable assets.
Examples: Airbnb’s disruption of the hotel industry and the digital music transition to services like Spotify show the power of innovation.
Bonus: Time Money Time Arbitrage
Utilizing Time to Create Wealth: The concept of time money time arbitrage seeks to use your time to earn wealth and then use such earnings to buy other peoples’ time and scale your wealth.
Business Strategy: This method allows you to leverage time and financial resources in order to grow a successful business.
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