The gold and silver that you purchase in order to protect your savings from inflation will be the first of what we call assets in the world of finance. To become rich, you must be prepared to spend your life acquiring a variety of different assets. The more assets you acquire, the richer you will become. If your liabilities exceed your assets, you will be pushed into poverty. Assets are things that tend to grow in value over time and or put money in your pocket in the form of cash flow. Liabilities are things which take money out of your pocket, and or lose their value over time.
Most people are poor, and will remain poor, simply because they have only liabilities without assets. If you analyze any poor person, regardless of what country they live in, or what background they come from, you will always find that their poverty is a result of a lack of assets. The rich are rich because they always spend their time looking for and acquiring assets. Some examples of assets are:
- Land
- Real estate
- Gold, silver, and other precious metals
- Businesses
- Stocks
- Bonds
- Rare artwork, memorabilia, baseball cards, antique furniture, or related collectibles.
All the seven items listed above are classic examples of assets. They are assets now and most of them will be a thousand years from now. All these things tend to increase in value over time. Land, of which only a finite amount is available, must rise in value over time, as more people move to new areas and increase the demand for residential and commercial real estate. Gold and silver, in addition to their inflation proof properties, also have numerous industrial uses. This is especially true for silver, which is heavily used in the medical industry due to its antimicrobial properties. Silver is also valued for its highly conductive properties as well.
Businesses can be the ultimate asset. Whether you start your own business or buy an existing one, companies make up the bread and butter of any economy, providing jobs for millions and driving economic growth. You cannot become truly rich unless you own at least once successful business. Businesses are perhaps one of the most diverse assets of the seven assets listed. A business can come in many forms, from that of a web development company to a chain of family oriented restaurants. Real estate is a timeless asset that will never disappear so long as humans don't go extinct, simply because people will always need a place to stay. Business owners will also need a place to establish their businesses and set up their offices.
It is for this reason that real estate is one of the greatest asset classes you can invest in. When we say “invest in real estate,” we are not talking about making a down payment on a home, and then moving in yourself to make payments on a thirty year mortgage. Instead, we are talking about putting a down payment on a home (using the bank's own money), moving in tenants, and then receiving a portion of the rent each month in the form of cash flow. This is the basics of successful real estate cash flow investing.
One thing that makes real estate unique is that not only can you earn money from the tenants every month in the form of cash flow, but you can also earn wealth through the capital gain appreciation of the property. Once the property increases in value, you can sell it, pay the bank whatever you owe, and pocket the rest, which can be a stupendous amount. Stocks and bonds are the easiest asset class to invest in, and they are the most liquid. Like real estate, you can earn money from stocks in two ways, and the first of these is through capital appreciation of the stock rising in value as a result of good company performance. The second way to earn money from a stock is in the form of cash dividends, where you are paid a given amount of money for each stock you own.
Not all stocks pay cash dividends, but those who invest in them can build wealth through dividends as well as capital appreciation. Rare artwork and collectibles are probably the most fun of the seven asset classes, but it can also be very dangerous if you don't have knowledge of what it is you're buying. Rare baseball cards, comic books, dolls, or artwork can sell for fantastic prices, but as an investor, you have to know the market like the back of your hand, and it is absolutely critical that you're able to tell the real from the fake, because there will be a lot of fake stuff floating around.
At this point, you may be wandering which asset you should purchase? My answer is that you should purchase all of them starting with silver and gold. The reason we recommend gold and silver first is that it is easy to purchase, it is relatively inexpensive in comparison to other assets, and because inflation is having a negative effect on your money now, it is best to begin protecting it as soon as possible. It will take time to purchase assets within each of these classes, but the wealth you build will be well worth it.
You will want to take the money you've saved up from your freelance career, and you will want to use a portion of it to invest in a cash flow deal. You won't get much cash flow from gold, silver, or land, which is the primary weakness of these assets. However, you can get cash flow from real estate and businesses, and it is in this area that we recommend you invest first. The other assets can be purchased later.