Assets and liabilities are two important factors that are very important for you to understand. Both are simple terms. An asset is the one that gives you money in your pocket. Liability is the kind of expense that is a responsibility on you.
What do assets mean?
An asset is called one that holds value, and in the future, it will give you a small amount of money, or your money will become a source of income that you will keep earning every month. If you invest in the place in which your asset is created, it will give you income. Just as dividend stocks are a type of financial asset for you, there are many other assets.
-
Cash
Cash is in a physical form, which will give you money in the future. If it is in your bank account or in a FD, it will give you money in the future. It is an asset.
Investments
Stock Mutual Fund A fixed deposit is an asset. A bond is an asset that will bring money into your pocket. Mutual fund stocks will give you good returns after a period of time. All are in the form of assets.
-
Property
Property is also an asset in which, if you invest, then by giving it on rent, you will be able to generate rental income day by day. The value of that place will also increase, which will increase the value of your asset. In reality, an investment is an asset, whether it is a shop or a property. Land is anything that increases the value of your asset and leaves you with money in your pocket.
-
Vehicles and equipment
Vehicle equipment is an asset that will earn you money. You will be able to go anywhere at a given time, which will give you the value of your time; hence, it is also an asset. The value of the asset will decrease over time, depending on how we maintain it.
-
Intangible Assets
Intellectual property rights, patents, trademarks, copyrights, and goods are all assets. For example, if I have a website, I have taken its trade mark, or in the trade of any name, if I have taken the mark, it will be sold at a good price in the future.
What Liabilities Mean ?
For which you will have to pay in the future, money will be taken out of your pocket; all that is a liability. The less liability you keep in your life, the better it is because we can create that much wealth by saving the same money.
-
Bills
If there is any bill, like an internet light bill, that you have to pay, like the bill of a facility taken, you have to pay it. Liability is a word related to the facility, in which you will have to pay for the facility; all the facilities will be included in a liability.
-
Loans
Loans are the biggest liability that keeps people in debt and should be kept to a minimum. A loan is a liability because you will have to return the money to the person who borrowed it, you will have to pay interest on it, and all these things are included in liability.
-
Credit Card Debt
A credit card is in the form of a liability. You will buy something from it and later you will have to pay its instalments , which is a liability.
-
Rent or Mortgage
If you live on rent, then the rent or mortgage value will be called the liability value because, in the end, you will not get anything; the money from yours will go into someone else’s pocket.
The big difference between assets and liabilities is this
-
Assets put money in your pocket or have the potential to do so in the future.
-
Liabilities take money out of your pocket because you owe it to someone else.
Why It Matters
Now it will be easier for you to make the decision as to what you should increase so that your wealth increases. You should always keep your liabilities as low as possible so that you can create good assets. Assets are the only ones that will give you sources of passive income. Money will come into your pocket even while you sleep.
There is one thing that can make you money even while you sleep. You should create such assets that you will be able to use for other purposes. The rest of the wealth can be created, but once you know how to create assets, you will be able to progress quickly.
What are five liabilities?
- Loan
- Rent
- Bill
- Unearn revenue
- Roytalties pay
What are five assets?
- Property
- Fixed deposite
- Stocks
- Jewellery
- Core buisness