An Asset is an item of value owned by an individual or corporation, especially something that has the potential to make a profit while you own it or when you sell it. An asset can be real estate property, a business, or securities such as stocks and bonds, etc. A Liability is a debt, financial obligation, or item that loses value or creates an expense while owned, and often a loss is made when its sold. Liabilities can be credit card balances, lines of credit, car loans or other loans, payment plans for purchased items, etc
If you truly want to become financially free or rich, you have to buy more assets than liabilities. You want your personal balance sheet to look like this :
Personal balance sheet
Assets Liabilities
Stocks Loans on which interest has to be paid Mutualfunds Car loan
Bonds Credit card debt
Gold & silver
Money market account
Franchise
Business
Bonds
You can become financially free or even rich with a balance sheet like this because your income is greater then your output (expenses). Building a personal balance sheet like this won't happen over night. But with patience, self-discipline, and a plan, someday you can have a balance sheet that looks just like this or even better!!
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