In today’s society, I would define rich as someone who makes a million dollars per year. If you want to be super-rich, you should be making at least a million per month or more. If you have lower standards and shoot for merely by wealthy, you would need to make $250,000 or more per year. I recently read a story about Rich Dad, Robert Kiyosaki, who said when he gets up in the morning he checks to see if he is on the Forbes list of the Richest People in America. Robert says he will continue to go to work until he is on this list. Regardless of how you define wealth, it starts with determination and a new way of thinking.
The biggest distinction between the rich and working classes is that the rich focus on projects that continue to pay dividends for life (residual income) while the working class focus on earning a single paycheck. Simply, the rich look to do a project once and get paid over and over for that one project. For example, the rich may invest in a hotel that pays them a recurring income for years. Or they may invest in equities such as monthly dividend payers that will pay then a dividend check each month. The major point is to create investments with one-time efforts.
Secondly, the rich society often diversifies their income streams across different asset classes. They may own stocks, bonds, real estate, intellectual property, retail companies and other types of income generators. You may not start with a list of assets but you will want to expand your horizons with income from multiple sources. You wouldn’t invest all your worth in one stock so don’t depend on one income stream for a lifetime of income.
What is your most valuable asset? This may be a trick question but the answer is your TIME. If you think about it, one a minute goes by you can never get it back. If you incur a profit loss on a project, you learn a lesson and go on to the next project. But with your time, you can never get it back again. The rich know this theory very well. They prefer to make money with passive income rather than active income. Passive income doesn’t require you to be actively involved in earning this income. In comparison, the working class trade their time for money through a job. The rich invest their capital to make passive income so they can free up their time for other pursuits in life.
We will discuss passive income in more detail in future posts.
