What is an asset?

Today’s word is asset. The dictionary says an asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit. To make things simple, an asset is something you acquire that makes you money. If you were to buy a house, if you rented the house and the rent covered your ownership expenses and brought you in a little extra cash you have an asset. Another example of an asset is a share of stock. When you buy a share of stock, you are buying a piece of a company. You buy a share of a company in order to share in their profits. You buy the stock in hopes that over time the stock will increase in value. Also, many stocks pay a quarterly dividend to it’s share holders. A dividend is basically a piece of the profits the company made that quarter. A stock is an asset because you bought something (a share of stock) which potentially can bring you money (increase in stock’s value and dividend). Now, I’m going to get a little more practical. My next example of an asset is a lawnmower, a string trimmer and a blower. These become assets based on what you bought them for. If you bought them to keep your yard looking nice, they are not assets. If you were to decide, I want to make a little extra money by offering lawn service in my neighborhood, now your tools are assets. Once you put them to work, they will eventually pay for themselves and put money in you pocket. One thing important to note is what makes something an asset is how you use it. A house itself is not an asset. When you decide to rent it out, it becomes an asset. My last example of an asset is the easiest to acquire. Knowledge and education are the most valuable assets you can acquire. You can invest $20 in a book. That book can give you thousands of dollars worth of information. If you are dedicated to applying the knowledge, it is an asset. You don’t even have to invest money to acquire knowledge. You can invest the time in researching skills the make you money. On the high end, you can take courses, go to seminars or pay for mentorship that costs thousands of dollars. Again, all are worth it if you intend to apply the knowledge to make money. I stress the application of the knowledge because a lot of people like to get education to get a certificate. They want to say, I have a degree, but they don’t use the education to enrich themselves. The investment becomes an asset based on its usage. The key to wealth is acquiring assets. Usually, a millionaire doesn’t have a million dollars of cash in the bank. They usually own a million dollars worth of assets. Assets are the key to wealth building.