15 Assets That Make The Rich Even Richer

Introduction

• Key principle: Assets put money in your pocket; liabilities take money from you.
• The more assets you have, the richer you become.
• Overview of 15 assets that are making the rich even richer.

1. Cash

• Cash in bank deposits earns interest.
  • Downside: Interest often doesn't keep up with inflation.
  • Example: Apple has $150 billion in cash reserves for liquidity.
• Reasons wealthy people keep cash:
  1. Accessibility to seize opportunities.
  2. Higher returns through cash deals and peer-to-peer lending.
• Peer-to-peer lending: Higher interest (7%-20%) compared to bank deposits (~1%).
  • Caution: Be rational when investing.

2. Real Estate

• Benefits: Rent payments and appreciation.
  1. Rent is a steady income stream.
  2. Appreciation due to increasing population and demand.
• Types of real estate assets:
  1. Residential buildings.
  2. Office buildings.
  3. Commercial buildings.
  4. Land.
• Note: Your personal home is a liability, not an asset (it costs money to maintain).

3. Bonds

• Definition: Governments or businesses issue bonds to raise cash.
  • Investor gets regular interest payments, principal returned at maturity.
• Bonds are low-risk, backed by the government.
  • Low reward (3% yearly return), better than bank interest.
• Purchase methods:
  1. Directly from treasury departments.
  2. Through brokerage firms.

4. Stocks

• Definition: Ownership stake in a publicly traded company through shares.
  • Example: Owning 10% of a business by holding 1 million out of 10 million shares.
• Benefit: Accessible ownership in lucrative companies.

5. Mutual and Index Funds

• Definition: Buy multiple companies' stocks as a group.
• Benefit: Diversified and safer investment.
  • Popular index funds: Fidelity Zero Large Cap, Vanguard S&P 500 ETF, etc.
• Statistic: S&P 500 average annual return over 90 years is 9.98%.

6. Equipment

• Definition: Items that generate or accelerate income.
  • Examples: Tractor for farmers, laptop for programmers, car for Uber drivers.
• Key Point: Only an asset if directly tied to income generation. Otherwise, it's a liability.

7. Patents

• Definition: Legal protection for inventions, ensuring only you benefit from them.
• Benefits: Generate revenue through licensing or suing unauthorized users.
  • Examples: Slinky, Kush ball, Big Mouth Billy Bass, etc.

8. Trademarks

• Definition: Protect symbols, words, or phrases associated with brands.
• Benefit: License the trademark for commercial use in exchange for fees.
  • Example: Michael Buffer's $400 million earnings from a trademarked catchphrase.

9. Brand and Goodwill

• Brand: Company’s public image.
• Goodwill: Emotional affection customers have toward the company.
  • Example: Kardashian family’s successful branding leading to high sales.

10. People

• Employees are invaluable assets who innovate and drive business success.
  • Example: Steve Jobs' impact on Apple.
• Important: High-value employees are hard to replace and drive company value.

11. Raw Materials and Commodities

• Investment: Buy low, sell high when in demand.
  • Examples: Gold, art, vintage cars, luxury watches.
• Note: Only invest in what you understand to avoid losses.

12. Books, Songs, Digital Courses

• Benefit: Infinitely scalable; sell multiple times after one-time creation.
  • Examples: Psy's “Gangnam Style,” Mariah Carey’s “All I Want for Christmas.”

13. Royalties

• Definition: Earnings from intellectual property usage rights.
  • Example: “Friends” cast earnings from syndication, George Lucas’s Star Wars merch revenue.

14. Unique Rights

• Competitive advantages due to special conditions or regulations.
  • Examples: Indian Gaming Regulatory Act, tax exemptions for churches.

15. First Mover Advantage and Proprietary Business Models

• Benefit: Innovation and unique business models give long-term market advantages.
  • Examples: Apple’s App Store, Netflix’s transition to streaming.

Bonus: Time-Money-Time Arbitrage

• Concept: Use time to generate money, then use that money to buy other people's time to scale up efforts.
• Fundamental business lesson: Employ others to generate more value and profit from the difference.

Conclusion

• Highlight the importance of understanding and leveraging different asset types to build wealth.
• Engage audience: Encourage comments about which assets they plan to secure.