The True Definition of Wealth
Before you can be truly wealthy, you must first know what wealth really means. Again, many people think that a person's wealth is defined by how much he earns, by the clothes he wears, by the house he live in and by the way he lives.
A person's wealth is actually defined by how long a period of time he/she can sustain their lifestyle if they stop working. The longer you can go on living your life without working another day, the richer you actually are.
Your wealth is therefore defined by 3 things:
- Your monthly expenses
- Your Liquid assets
- Your passive income
Your liquid assets refer to how much cash or cash equivalents you have . ( like stocks, bonds and fixed deposits)
Your passive income refers to income that you will continue to receive even after you stop working. ( like interest, dividends, profits from a business)
HOw the Rich manage the money?
Spend Less than You Earn. Invest the savings for COMPOUND GROWTH Until You Accumulate a Portfolio of POsitive CASH FLOW ASSETS that generate Enough Cash Flow to sustain or Exceed your DESIRED lifestyle.
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