The New Rich Class and the Assets They Hold

Money doesn't make you rich. Access to money makes you rich. And you get that access mostly through assets. Assets are what you own that bring money into your pocket.

Assets are pipelines of streams of income. If you have only one source of income you are not playing smart. You should have at least five. And those five must be separate from each other.

This means a collapse in one doesn't significantly affect the others. You are rich by how much money is coming to you on a regular basis.

The middle class is shrinking and gradually getting replaced by a new poor class and a new rich class.

The new poor class are simply those who work for money. It doesn't matter how much you make, it is almost certain that your expenses will keep up.

What good is it if you make a million dollars a year and your yearly expenses sum up to the same amount and there are still things you can't afford to do?

That is the new poor class. They make a huge amount in wages, but they are left with almost nothing after all the bills they have to pay.

The new rich class have freedom. First, they have no jobs or wages. Instead, they have sources of income. Money comes to them steadily from multiple avenues. Sometimes they have to do some work, but mostly it is on autopilot.

This model of living is what I have advised people to embrace. Create channels of residual income. And there are 5 major kinds of assets (or channels) that this new kind of rich.

1. Intellectual Assets

These are channels of money to you because of public perception of your intellectual capacity. If you ever get stuck financially, you know you can leverage this to get paid for something.

This is based on what people know you can do. And in many cases, it involves some kind of work. It is good to always have this option open.

If you ever do any kind of work that gets you paid, first you have to get paid before the work. Second is that it has to be an intellectual work, not something you do with your hands.

Of course, your hands will be used in some way, but if it is just a hand skill, you can be easily replaced. But if it is intellect, you can't be easily replaced.

A good example is a pianist who knows how to read musical notes and play. And a composer who creates new music (that people love) and also plays the piano. If you are paid to work, don't be the pianist. Instead, be the composer.

2. Intellectual Property

This is getting paid for work you have done. Whatever you can copyright or trademark works in this case. You continually get paid for the work you have done.

Some good examples include books, musical pieces, technological inventions, scientific processes, etc. The idea is that they keep generating that flow of income as long as other people are using your intellectual property.

That is an asset you should have in your portfolio. Anyone can create an intellectual property. Just pick an area you are interested in or knowledgeable in.

In fact, you can go to work for the sole purpose of creating intellectual property. And then quit when you have created the IP. That is actually smart.

3. Liquidity Channels

If you need money very fast, can you get it? This is where assets like stocks, and crypto come in. You can sell those and get cash fast.

Unlike other investments, liquidity channels do not expressly or automatically drive the flow of money to you. However, if you play smart they can. For example, following a system like the millionaire investing playbook goes a long way.

Liquidity channels are to beat inflation and currency devaluation. This is where you get equity growth that you can convert to spendable cash very fast. And this is very useful, especially during challenging times. Think well about the liquidity channels that will work for you. Don't copy anyone.

Some like gold. Others like silver. And there are others like bitcoin. Growth stocks also fall in this category.

4. Passive Income Investment

Good dividend stocks fall into this category. Also, good real estate investments fall into this category. But there is a major drawback here.

Money is illiquid here. You can only enjoy the dividend. You cannot take out the equity anytime you want. The moment you make changes to the base equity, you shake things out of balance.

The major difference between this and intellectual property is that you build passive income with the money you have. Meanwhile, you build intellectual property with your intellect.

Each has its purpose. And you want to have both in your wealth portfolio.

5. Geographical Freedom

Opportunities to grow richer are location-based. And the prime location changes from time to time. The new rich class understands this and understands the value of investing to widen their geographical options.

Sometimes how much money you have boils down to where you are. And no amount of effort can make you more money than the supposed level of where you are.

Moreover, money dries up in certain places and moves to other places. Recently, we have seen foreign direct investment in China dry up because the Chinese economy is relegated to a lower growth rate. Foreign investors have thought that the Chinese government would initiate a Western-style economic stimulus.

But the Chinese government has stood its ground thus far. This is a good thing for the people of China, but not so much for the foreign investors in China. This is why you never want to be stuck in a country, even if it is the country of your citizenship.

Freedom to make money in any country is an asset. Most people don't know how restricted they are until they try. Like they say, you don't know you are in prison until you try to get out.

Conclusion

Be among the new rich. Don't be among the new poor. Think about what you have incorporated and what you are yet to incorporate.

Don't work for money. Instead, make money work for you.

Stay rich.

P.S. Read: Being rich is not about how much money you have