What is a real asset?

Most people today want to be rich, but no one is willing to learn. Like I have constantly stressed , the importance of financial literacy is more than knowing the definition of a word, but to understand the meaning. Many people want to become a rich investor, but many do not know the simple difference between an asset and a liability. An asset in the simplest terms is something that puts money into your pocket , where a liability is something that takes money out of it.  The distinction between the two can be shown the examples below for further understanding.

                        (Image taken from Rich Dad's Guide to Investing By: Robert T. Kiyosaki)
Please Note an asset puts money into your income, on your income statement.

   (Image taken from Rich Dad's Guide to Investing By: Robert T. Kiyosaki)

Whereas a liability will put money into your expense colum, in other words taking money from your pocket.

A viewer of this blog asked me a question "Why is it so important to be able to know the difference between being : Rich, Comfortable or Secure; the reason being can be deprived from the examples above. A Secure investor would have a balance sheet that is leveled between assets and liabilities. So although they may not be poor, they are also not in a situation to become rich.

A comfortable lifestyle would be the same as the "Average Joe" in regards to the balance sheet and income statement someone who is comfortable would show a minimal amount of assets while having a liability colum full.

A rich investor would have his assests pay off eachother as well as provide income for further investments as well as personal net income. I will go more into depth of what it takes to become a rich investor in my following blogs. For now I would like all readers to adapt and understand the basic meaning between an asset and a liability , it is crucial for any type of success in the financial industry.