You Need To Become A Collector Of Cash Generating Assets

If the 1% had a secret it would be this – they focus on collecting assets that generate dividends, interest, rents and royalties. The collect cash generating assets such as patents, movie rights, property ownership, businesses, equities or farmland. On the other hand, the majority of people focus on collecting ‘stuff’. They always buy liabilities instead of assets and wonder why they never get ahead. It’s time to learn the rules of the game. Its time to learn how money works.

What you read, watch and fantasise about the rich and what they actually do are two different things. Most people have this erroneous view that the rich splurge without thinking. They buy expensive cars, have a carving for antiques and own huge wine cellars. These are merely side hobbies that occupy very little time. Do not focus on what the wealthy buy for consumption, but rather, what they buy to generate more earnings streams. You’ll often find that for every £20,000 watch they bought, they purchased a £500,000 apartment building – they only splurged on the watch once the cash generative asset was in place. This single shift in thinking can greatly enhance the probability of you achieving the same ability to live how you desire.

Dr. Thomas J. Stanley, an author of various studies on self-made millionaires brilliantly summarises phenomenon in his book titled Stop Acting Rich:

“The problem is that people, particularly younger people, have come to focus on the trappings of wealth over everything else – including the work or savings to accumulate the wealth to be able to reasonably afford luxury brands.  When we think about “rich,” we think about acting rich over being rich.

The Mercedes Millionaire worked hard to achieve success.  First it was about the success, and then came the high-consumption lifestyle – which is congruent with their level of success.  Buying a Mercedes hardly puts a dent in their financial statement.  Contrast them with the acting-rich actors who work to acquire brands with which to imitate the consumption lifestyles of the Mercedes Millionaires.  Not surprisingly, wannabes in general are less satisfied with their lives and have lower levels of job satisfaction than do millionaires.  Driving a leased Mercedes, wearing an expensive watch, or filling up a heavily mortgaged home with Grey Goose will not make one rich or happy.

When an aspirational looks at a Mercedes Millionaire, he only sees what is on display.  He focuses on the leaves of the oak tree, not its roots.  But the values and work habits of millionaires, like the roots of the oak tree, are what support their lifestyles (the leaves), not the other way around. Who should the aspirational seek to emulate instead?  The Toyota Millionaire.  This advice may be painful for some hyperspenders.  For them, a Toyota would never do.  The very thought of a Toyota in the driveway makes them queasy.”

For the majority of us that want to make a fortune ourselves, we probably all start off the same by selling our time to others, exchanging hours of our life for cash.  That cash is our seed money.  Instead of consuming it in an instant, we need to plant these seeds in the ground by buying cash generative ideas. If you spend it on things that not only lose value but require you to spend money on upkeep, you can lock yourself into a cycle of wage slavery, always having to sell more and more of your life to maintain your position. The idea is to buy buy assets that will generate more cash that you can then spend without having to sell your time. The idea it to buy your way to financial freedom . The idea is to escape the rat race. For this, you need to live like no one else, so that later you can live like no one else. You need to plant the seeds today to enjoy the fruits of your labour tomorrow. You need to be patient. You need to be disciplined. You need to play the long game. The rewards are worth it.  The fruits of your labour will be sweet.