Absolutely all successful people on the planet have their own assets. This is one of the best ways to earn passive income by investing a certain amount of money just once. An asset is essentially a money generator that works around the clock without investor participation. An asset makes money regardless of what its owner does. How to acquire assets in our country if there is no start-up capital?
Assets may vary in value, so it is not necessary to immediately expect to purchase a three-room apartment. You can start with small investments, gradually increasing your savings and acquiring new assets.
What can act as an asset?
- Real estate leased. Generates cash flow to the owner.
- Shares for long-term investment (buy&hold strategy). Over long periods of time, a portfolio of shares of successful companies increases in price, which means that in 5–10 years the shares can be sold for a considerable profit. In addition, dividends on shares are already being paid.
- Bank deposit.
- Securities (units) of mutual investment funds (UIFs)
- Any other items rented out by the owner for profit (equipment, car, etc.)
However, the apartment in which you live and for which you pay with your own money and buy furniture for it is not an asset. This is definitely a liability.
Just like a personal car, which will be a liability that requires care and investment in it until you start renting it out or working on it as a taxi driver. Only then will it become an asset that generates money.
Liability is what, as mentioned above, takes away money. Bank loans for which we pay interest, our homes and cars are all liabilities.
Useful recommendations and expert advice
Set aside 10% of your earnings from all your assets and invest them in other liabilities. This will allow you to increase your turnover every year by acquiring new assets. In just 3-5 years, passive income will increase significantly.
Question: The cost of repaying the loan is higher than the cost of renting a home, how to purchase assets in this case? Answer: It seems only at first glance. You need to know the market value of rental real estate and build on this figure when consulting with a bank regarding a loan.
Question: Can a bank deposit be considered an asset? Answer: An asset brings in additional money, a bank deposit also increases money.
Question: How to purchase assets abroad? Answer: If we talk about real estate, purchasing it abroad or taking out a loan is quite simple. Banks are loyal to investors in our country and provide favorable interest rates.
Reasonable balance of assets and liabilities
However, it will not be possible to completely get rid of insidious liabilities.
Otherwise, you will be forced to reduce your standard of living. The correct strategy is to maintain a reasonable balance between assets and liabilities. Do not strive to acquire all the unimaginable luxury items. Do not voluntarily plunge yourself into the bondage of bank loans. Assets provide that very financial independence when money works for a person, and not vice versa. By purchasing assets, we ensure a comfortable existence in the future.
But what about the huge mansions and luxury cars of the rich? – some will ask. And they can also afford it thanks to profits from assets.
A financially educated person who knows what will make him rich will strive to limit his liabilities and gain knowledge about how to acquire assets. While illiterate people, who are the majority, do just the opposite.
Gold and precious metals
When it comes to safe investments, many people think of gold and gold bullion coins. Everything that will be said below will equally apply to other precious metals (platinum, silver). However, for convenience and brevity of presentation, we will use only the term gold.
Traditionally, investing in gold is viewed from the point of view of high reliability. If we look at the dynamics of the exchange value of this precious metal, we can see constant and sustainable growth.
An investor who decides to invest in gold will inevitably face the problem of which financial instrument is best to choose. Gold bars and bullion coins come to mind. You can store your money in both.
However, it is much preferable to choose investment gold coins. By some strange whim of Russian legislators, any person who wishes to buy a gold bar from a bank will be required to pay VAT or value added tax. Its rate is 18%. But if we pay 18% in addition to the cost of the investment asset, then it is impossible to talk about any highly profitable investments.
At the same time, transactions for the purchase and sale of gold investment and collectible coins are not subject to additional tax burden.
The benefits of purchasing gold are that it is also a stable and virtually risk-free investment. But the shortcomings should again be sought in the extremely low reliability. If we exclude short-term speculative market issues, then the rise in precious metals prices follows inflation. That is, such an investment of money is primarily intended to save it during periods of economic instability or crisis.
Tips for quickly acquiring assets
- It is better to purchase real estate as an asset abroad, in an economically stable state. There you can find really very affordable housing, which you can then rent out and receive an income of up to 30% per annum.
- If there is not enough money to purchase, housing can be purchased on credit. For example, using the services of banks in Cyprus or Portugal. This is a profitable option, since the bank lending rate abroad is lower than the inflation rate in Russia.
- Or, if you do not want to commit yourself to credit obligations, you can purchase real estate at the initial stage of construction and then sell it at a profit.
- And finally, passive income will come from shares of a company that has proven itself in the market and is growing steadily. The subsequent sale of the shares will also bring you profit.
If you have no idea where you can get funds to purchase assets, try, following the advice of Robert Kiyosaki, saving ten percent of each salary and spending it only on investing in assets. You will be surprised by the results of such a seemingly simple action.
Popular assets
- Real estate. The most common and highly reliable asset that consistently generates passive income. To acquire this type of asset, you need an impressive initial capital.
- Stock. Having knowledge in the field of investing in shares can acquire profitable assets. The stock market is developing every year, so it has good prospects for acquiring new assets.
- Share in business. Large businesses often have several founders who control their shares of the company. With good organization and management of the company, you can receive passive income from your share in the business.
Mutual funds, shares and purchase of securities
Other assets are acquired in a similar way:
- Short-term and long-term securities. For example, an enterprise acquired shares of PJSC Gazprom and will receive dividends on them. At the time of acquisition, a new non-current asset is created - financial investments.
- Mutual fund units with a yield of 30% per annum were purchased.
Newly created assets can also be the acquisition of shares, shares of other business entities, contributions for joint activities.
Intellectual property
In Russia, intellectual property (IP) includes:
- results of creative work of scientists and artists
- databases, individual computer programs
- trademarks, brand names
- results of inventions, industrial developments
- new plant varieties, animal breeds
- know-how
If an IP object is the property of a business entity, it is assessed in the appropriate manner and placed on the balance sheet as an intangible asset. Businesses also buy IP.
An investor who is able to properly use the financial and material resources that belong to him receives the greatest benefit from his business. The basis for generating his income is the creation of profitable types of assets.
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How are investment portfolios formed?
Before choosing tools, you should decide on an acceptable strategy.
There are three types of them: conservative, moderate, aggressive. In the first case, the investor or fund chooses instruments with the most stable price and good collateral. Such assets do not promise high income, but they will allow you to preserve capital and increase it at a percentage faster than inflation. A moderate strategy involves diversifying risks and forming a portfolio of assets with varying degrees of risk. Ultimately, the investor receives a profit higher than when choosing a conservative strategy or an insignificant loss, part of which is offset by profits from more stable instruments.
Aggressive investors strive for excess profits by risking most of their investment capital. This strategy is not recommended for beginners. Even professional investors try to resort to transactions with risky assets only as a last resort or when their dynamics are obvious. An example is the behavior of the USD during the last presidential elections in the United States.
How to create an asset from scratch
To open an enterprise, an authorized capital is usually created, which serves as the initial source of its existence. The owners (founders) contribute it at the first stage with money, tangible or intangible assets necessary for its activities. After state registration, the enterprise enters into an agreement with the bank to open a current account and sends the initial contribution of the founders there.
Cash in a current account is an asset. Another business participant contributes production equipment as a contribution to the authorized capital. According to established accounting rules, equipment is installed and taken onto the balance sheet as fixed assets.
Part of the money from the current account under concluded contracts with suppliers was paid for raw materials and materials for production. The received raw materials and materials are capitalized as inventories - working capital.
Finished products are manufactured using equipment using materials. Finished products are sold to customers who pay for them at the cash register or to a current account - an asset is created again.
To run a business you need a certain amount of cash. If you manage to accumulate a surplus of money compared to what is needed to conduct your main line of business, it can be used to create other profitable assets. The following sections introduce other types of useful values.
Currency
Until recently, currency was also considered as an extremely reliable and quite profitable investment object. However, today everything is not so clear.
In recent years, Russians have most often invested their own savings in euros or American dollars. But at present the situation in the United States and the European Union can hardly be called completely stable. This concerns the United States of America to a lesser extent, and the EU to a greater extent.
In this regard, if out of habit you want to invest your money in foreign currency, then you should choose the American dollar. But there are also big questions about the profitability of such investments in the near future.
