Do you know what’s the one thing rich people buy and the poor and middle class don’t?
Most people think that rich people buy all those luxuries. They see it on social media like Facebook and Youtube.
Rich people seem to have all these nice things like expensive watches and fancy cars. They stay in luxury hotels and have huge houses.
When you see these things, that’s what rich people have. But actually, it’s not what got them there. That’s a very important distinction.
So what do rich people actually buy? How do they get rich?
They buy assets.
That’s the number one thing that differentiates them from the poor and the middle class.
What Are Assets?
“An asset is anything of value or a resource of value that can be converted into cash.”
Assets are things you buy, that produce you an income. For example, an asset could be a real piece of real estate or an apartment building. It could also be a company, stocks – any kind of investment that would put money in their pocket.
Rich people buy such things regularly. That’s why they stay rich. The poor and the middle class, on the other hand, buy liabilities.
Rich People Buy Assets, Poor People Buy Liabilities
If you read Robert Kiyosaki’s “Rich Dad, Poor Dad” you will see how he explains it.
The middle class mostly buys liabilities. Even, for example, their primary home. They think it’s an asset but it’s actually a liability.
Assets are supposed to make you money while you sleep. Liabilities, however, they cost you money. Assets feed you and liabilities eat you.
So, the poor and the middle class usually have little or no assets at all. But, they have a lot of liabilities. Basic items like their home, their car and so on. They buy them but those things don’t earn them anything back.
Rich people buy assets first. Then, with the money that comes from them, they finance their luxuries. So when you see rich people having all the fancy luxuries, they buy that from the money that the asset produced for them.
Rich people think very differently when it comes to money. Instead of saying “this is too expensive, I can’t afford it.” Rich people ask themselves “how can I afford it?”
That’s fundamentally different from how most other people thing. In everyday life, others often complain about everything being too expensive. But, to simply say it’s too expensive is a poor person’s mentality.
Most rich people dig even deeper. They ask themselves “how can I make this to make me money?” They invest their money strategically and get huge returns.
Learn From The Rich
So, if you want to be a rich person you have to manage your money as they do. That means, before you buy liabilities, you need to buy the asset first.
Let’s look at my Bentley for example. I could have just bought it anytime. But instead, I waited a bit. I bought an asset that would make me the money first. In my case, that was a real piece of real estate. I knew this asset would pay my monthly payment of my liability – my Bentley in this case.
If I’d just bought the Bentley right away, I would have to pay it from my own pocket. But this way I had the asset first and have that pay for my liability. Even if I decide to change cars later, guess what? I still have the asset that’s working for me.
Rich people very well buy nice things. We just don’t buy out of our pocket. We invest first.
The definition of a rich person is very easy:
For every dollar they spend, they calculate with some kind of return. If they buy liabilities, they do so very aware. They are very conscious of their decisions.
Assets – that’s the number one thing that rich people buy.
What Kind Of Assets Do People Invest In?
When I define assets, I don’t do it like you would in accounting. I’m talking about what rich people really have that generates them income.
- Business: while poor people only have a job, the rich have a business. They benefit from the work of all their employees.
- Arts & Antiques: For this asset class you have to be very knowledgeable. But if you are, it can get you a great return on investment.
- Real Estate: This is the most popular asset class among the rich. There are many different types from residential to commercial properties. There are also tons of different strategies. Why do so many rich people invest in real estate? Because the banks love it. It’s tangible and secure.
- Paper assets – like bonds and stocks. Those are long term investments. You buy them in the hopes that they are worth more later. Paper assets can be turned into money quite easily.
- Intellectual properties – like trademarks and copyright. They have a low maintenance fee and you can lend them to other people. That’s why I personally like these kinds of assets.
- Precious metals – silver, gold, and platinum. Rich people like to have their money in gold because it’s recession-proof.
- Attention and Audience – This is a very new asset class. In the online world, attention is a new currency. It gets you, new customers. Even most rich people overlook this asset.
But, let me give you one more tip. There is actually one more thing that rich people by while the poor and middle class don’t.
Can you guess what it is?
Rich People Buy TimeRich people buy time. Poor people sell time. Click To Tweet
If you are an employee, you are selling your time. You get paid based on the number of hours you work. So, you exchange your time for money. Most people think in weekly or monthly payments.
Rich people, however, don’t think like that. We buy time because time is the one thing you can’t replace.
The time you take the read this article, that time is gone…you can’t replace it.
Other things are replaceable. Customers, employees, even money is replaceable. Time isn’t. Nobody can manufacture more time.
If I have the time, I can always make more money. If I lack time, I can’t.
That’s why rich people are aware that time is the most valuable commodity. And that’s also why rich people hate it if somebody is wasting their time. It’s worse than stealing money from them.
I can always get the money back. But the minute I waste? I can’t get it back. If I use my time wisely, I can use it to make a lot of money.
So, rich people buy time, talents, people that can help us and people that could save us time. Because we are very aware of the value of your time.
Value Your Time
Once, I visited a pretty successful CEO. The company was doing probably 20-30 Million dollars a year. I visited his office and I couldn’t believe my eyes. The minute I got there, he was mowing lawns in front of his office! Seeing this told me, this CEO doesn’t value his time.
Couldn’t he have found better things to do? Better ways to invest his time? Find a better way to utilize his talents? It made no sense.
The next time you spend two hours cleaning your home or mowing your lawn, do a very basic calculation.
First, find out how much your hour is currently worth. Maybe right now your hour is worth $50 or $100. That would mean, when you spend two precious hours doing household chores, you lose $200. Is that really worth it?
So, I know if I decide to watch a movie for two hours, the movie didn’t just cost me 20 dollars. It cost me much, much more.
I still enjoy watching movies and do so sometimes. But I have to be aware of how much it actually costs me to invest this time. Before I watched it I would ask myself if the experience is worth that kind of money.
Often, it’s worth it. It’s time that I spend with family so I’m willing to pay that amount. But I do so very consciously. Most people aren’t aware of this at all. If you think about it that way, you will be more present in the moment.
Before you do something, calculate if it’s worth your time. What kind of amazing results could you produce, if you invested your time differently?
You have to prioritize and understand how you value your time. If you don’t value your time, you are not going to be successful.
Bill Gates, for example, has his calender in 6-minute increments – and he is a billionaire. My mentor Dan Pena is scheduling his day in 15-minute increments. They all think about how they manage and invest their time well.
So when you admire millionaires, just don’t look at what they have. The fancy car and so on. Look at how they got there in the first place.
Rich People Are Patient
There is one more thing you have to be aware of.
If you are working hard to become rich, there is a common trap that people run into. You work hours and hours and suddenly you make a bit of money. I’m not talking about a lot of money, but you manage to make some.
At that point, most people think “damn, I worked so hard. I waited 20, 30, 40 years for that…I want that rich life NOW.”
And they go spend their money on luxuries, thinking that will make them rich. But actually, it will make them poor.
When you see rich people having nice things, you only see the surface level – the outcome.
Instead, you should look at the process of how they got rich. Again, you would realize, they buy the asset first.
If you are insecure and controlled by the ego, suddenly you want to show the world that you “made it”. But all you do is look rich, instead of being rich.
So actually, you didn’t “make it” – you only made yourself poor – probably poorer than before.
You need that self-discipline and self-control to make yourself by the assets first. Once you have that you can get all the luxuries you want.
After all, now the asset pays for it. So it’s okay to buy what you like. It doesn’t “cost” you because your investments are feeding you.
Buying whatever you want is the result. It doesn’t happen overnight. So look at the process beyond the surface.
That’s why rich people not only master their money and time, they also master themselves.
If you want to be rich, you have to think and act like a rich person. So, you want to avoid buying liabilities until your assets can pay for them.
Until you get money back from your assets, stay clear from purchases such as: Luxury brands, impulse buys, video games, fancy cars, and expensive homes.
For now, those things only cost you money and don’t give you any ROI. Video games can be nice but they also eat away a lot of your time. They give you a lousy ROI and ROTI.
For your home, sometimes it’s wiser to rent instead of buying right away.
Again, you want to be very conscious of your choices.
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