By: Stefan Aarnio
Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio
Remember: Please share this article if you found it enjoyable!
Robert Kiyosaki defines intelligence as “the ability to make distinctions”. For example, an interior designer will be able to make distinctions between 15 shades of blue giving them specific names like “azure”, “indigo”, “sky blue”, “royal blue”, “navy blue” etc.
A cigar connoisseur will know the difference between a fine Cuban cigar and a fake.
An investor should know the difference between money and wealth. Unfortunately, most investors do not know the difference.
Everyday we wake up and chase the pursuit of happiness. For most people, money is part of the equation. Everyone would like to be rich and rich means an abundance of money. However, there is a huge distinction between money and wealth.
A person can be wealthy and not have any money. Logically, the opposite is true as well; you can have lots of money and zero wealth.
Sports stars that make millions of dollars per year and lottery winners are examples of people who can make lots of money but have zero wealth.
On the other hand, a retiree with a solid income from their investment portfolio may have wealth but very little money to throw around.
What is wealth? What is money?
Wealth is measured and defined in time. The question we must ask is “if I stopped working today, how long could I survive?” If the answer is “forever”, then you have wealth. Many people who live paycheque to paycheque could only survive for a few months if they stopped working. These people have very little time to survive and very little wealth.
I recently heard a statistic that over 50% of American households are 1 paycheque away from bankruptcy. This may or may not be true, but it paints a grim picture of the lowest level of wealth. One paycheque is only 2 weeks worth of wealth and a very low level of survival.
Money on the other hand is much easier to define. Money is measured in dollars and all we have to do to measure dollars is count. The key with money is to learn to exchange dollars for wealth.
Traditionally speaking the rich are very good at trading dollars for wealth (assets that produce passive income), the middle class are good at trading dollars for liabilities (houses, cars, cottages) and the poor are good at trading dollars for expenses (flat screen televisions, booze, rent).
This year in my Real Estate portfolio I focused mostly on wealth rather than money. I built wealth this year through multiple income streams of both business and real estate. To myself, I consider it important to build income streams early in my life. I wanted to create wealth and the ability to survive “forever” without a paycheque so that I could become creative in my free time.
At the time of writing I have multiple income streams and can survive “forever” which means that my passive income is greater than my expenses. However, wealth alone is not enough to win the game of money. We need both cash and wealth to get the most out of life because dreams aren’t cheap.
In the words of the American billionaire Bill Bartmann “Cashflow buys you time, profits buy you praise”. Both cashflow and profits are required to win the game, the question is which one do you focus on today.
For most people with a paycheque, they should focus on learning to create wealth and multiple streams of passive income through real estate, dividend bearing stocks, internet businesses, traditional businesses, or joint ventures.
For people with wealth, they may be interested in creating more cash and liquidity through business, real estate and joint ventures.
The game of money is a game of balance and this year for myself, I will be starting the year off with a “cash” strategy; I have achieved a level wealth, which has freed up my time and will be pursuing my strategy to take my brand to the next level.
What are you doing this year to take your game to the next level? Will you be pursuing cash, wealth or both? Please discuss your strategy in the comments below.
Thanks for reading,
Stefan Aarnio
Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio
P.S: Please share this article if you found it enjoyable!
Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio
Remember: Please share this article if you found it enjoyable!
Robert Kiyosaki defines intelligence as “the ability to make distinctions”. For example, an interior designer will be able to make distinctions between 15 shades of blue giving them specific names like “azure”, “indigo”, “sky blue”, “royal blue”, “navy blue” etc.
A cigar connoisseur will know the difference between a fine Cuban cigar and a fake.
An investor should know the difference between money and wealth. Unfortunately, most investors do not know the difference.
Everyday we wake up and chase the pursuit of happiness. For most people, money is part of the equation. Everyone would like to be rich and rich means an abundance of money. However, there is a huge distinction between money and wealth.
A person can be wealthy and not have any money. Logically, the opposite is true as well; you can have lots of money and zero wealth.
Sports stars that make millions of dollars per year and lottery winners are examples of people who can make lots of money but have zero wealth.
On the other hand, a retiree with a solid income from their investment portfolio may have wealth but very little money to throw around.
What is wealth? What is money?
Wealth is measured and defined in time. The question we must ask is “if I stopped working today, how long could I survive?” If the answer is “forever”, then you have wealth. Many people who live paycheque to paycheque could only survive for a few months if they stopped working. These people have very little time to survive and very little wealth.
I recently heard a statistic that over 50% of American households are 1 paycheque away from bankruptcy. This may or may not be true, but it paints a grim picture of the lowest level of wealth. One paycheque is only 2 weeks worth of wealth and a very low level of survival.
Money on the other hand is much easier to define. Money is measured in dollars and all we have to do to measure dollars is count. The key with money is to learn to exchange dollars for wealth.
Traditionally speaking the rich are very good at trading dollars for wealth (assets that produce passive income), the middle class are good at trading dollars for liabilities (houses, cars, cottages) and the poor are good at trading dollars for expenses (flat screen televisions, booze, rent).
This year in my Real Estate portfolio I focused mostly on wealth rather than money. I built wealth this year through multiple income streams of both business and real estate. To myself, I consider it important to build income streams early in my life. I wanted to create wealth and the ability to survive “forever” without a paycheque so that I could become creative in my free time.
At the time of writing I have multiple income streams and can survive “forever” which means that my passive income is greater than my expenses. However, wealth alone is not enough to win the game of money. We need both cash and wealth to get the most out of life because dreams aren’t cheap.
In the words of the American billionaire Bill Bartmann “Cashflow buys you time, profits buy you praise”. Both cashflow and profits are required to win the game, the question is which one do you focus on today.
For most people with a paycheque, they should focus on learning to create wealth and multiple streams of passive income through real estate, dividend bearing stocks, internet businesses, traditional businesses, or joint ventures.
For people with wealth, they may be interested in creating more cash and liquidity through business, real estate and joint ventures.
The game of money is a game of balance and this year for myself, I will be starting the year off with a “cash” strategy; I have achieved a level wealth, which has freed up my time and will be pursuing my strategy to take my brand to the next level.
What are you doing this year to take your game to the next level? Will you be pursuing cash, wealth or both? Please discuss your strategy in the comments below.
Thanks for reading,
Stefan Aarnio
Freedomway.ca
facebook.com/stefanaarnio
https://twitter.com/stefanaarnio
http://ca.linkedin.com/in/stefanaarnio
P.S: Please share this article if you found it enjoyable!
RSS Feed