Asset is a thing that puts money into your pocket with little effort or one time hard work. An item of property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies. but what is laibility ?
Liability in financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events.
Liability take more from your pocket at a certain intervals. Some people buy liabilities first when they get job but this is the wrong way to live life think about your job is at risk, then what should do to maintain luxury lifestyle.
Types of Asset to Become Wealthy?
Generally assets have many types like current asset, tangible asset, fixed asset,etc but they are in accounting. We only focus on investing assets that make you wealthy.
1 Real Estate :- Real estate is a type of asset in that you buy land and plot for long term. Real estate give unfair advantage over other assets. On an average real estate give 10-12% CAGR returns. Real Estate need more capital than any other asset.
2. Mutual Fund :- A mutual fund is a pooled collection of assets that invests in stocks, bonds, and other securities. When you buy a mutual fund, you get a more diversified holding than you would with an individual security, and you can enjoy the convenience of automatic investing if you meet the minimum investment requirements.
Mutual fund is professionally manage by fund managers. They have competitive adavantages over retailers. Mutual Fund gave 12-15% returns yearly this is not fixed that depend on market condition.
3. Stock Market :- Stock market is a place where people buy and sell ownership of company. t is a place where shares of pubic listed companies are traded. The primary market is where companies float shares to the general public in an initial public offering (IPO) to raise capital.
Share Market creates more billionaires than any assets because business have huge potential to groww than any other asset. On an average stock give more returns than any other asset in between 20 -25% CAGR.
Share is a risky so don’t forget to make portfolio and invest in 2-3 companies that mitigate your risk.
4. Gold :- Gold is most popular investment among adults because they feel safe with gold.Gold and silver are tangible assets, but are frequently traded in the form of futures or options, which are financial derivatives.
Gold is for hedging with stocks, when stock market go down gold will make new highs. Gold give 1-12% return on an average yearly.
5. Dividend Income :- Dividends are payments by a company to you as a reward for owning a share in the company. Dividend payments are taxable and you must declare this income to Revenue.
For shareholders, dividends are an asset because they increase the shareholders’ net worth by the amount of the dividend. For companies, dividends are a liability because they reduce the company’s assets by the total amount of dividend payments.
Dividend income is not fix but on an average company will announced 1-2 time dividend in a year.
Also Read :- Dividend Income Tax in current financial year 2023