“There are people who have money and people who are rich” – Coco Chanel
We all crave high paying jobs. We all aspire to these jobs for – the perks, the salary and the prestige associated with it . The assumption is that once we have such a job, the wealth will take care of itself . Wealth is having money. If you have a lot of money, you are rich. If you don’t have much money, you’re poor. This may not be true since the salary earned is not the same as wealth.
Income is earning money. It can be the route to wealth creation, but income itself is not wealth. There are many ways to fritter away a high income. If you earn a lot but you also spend a lot — especially on things that lose value — then you won’t accumulate wealth. Think cars mobile phones and clothes.
This high income is used for lifestyle expenses. Your life style is not wealth. Wealth can be generated from income if part of it is used towards creating assets. These assets appreciate in value and generate other streams of income .
Wealth is really assets- Assets that generate additional income. The accumulation of income generating assets is wealth . You may reach a point in the future when your assets are generating higher income than your salary. You are truly on your way to being rich and creating a virtuous cycle of income generating assets generating income generating assets …
Subscribe to our page to receive regular investment insights.