In our day-to-day lives, our ability to spend on needs and wants determines our sense of financial wellbeing.
We need to earn income to spend and with time when our earning capacity reduces, our assets contribute to the difference between our income and expense so that our financial wellbeing does not suffer.
The asset will contribute to the difference only if it provides some value. Therefore, the choice of asset you wish to build is critical when you are considering if it is valuable or not.
The definition of an asset is, "It is a store of value that can be drawn and used."
The same is true for the human asset, especially now when the knowledge worker uses her skills, knowledge and attitude to generate income.
Assets are not expected to lose value but that is rarely the case. Even human asset loses value and a conscious attempt is required to acquire sustainable value.
So, how do you do that?
To provide sustainable value, you must keep upskilling yourself. This is how my graph was looking.
This meant a sharp focus on learning new skills that will help me provide value to others and create meaningful relationships on the way.
Here is my story:
The ability to sustain and create value improves your chances of earning more.
Often, in our journey of building assets, we take a lot of twists and turns, we fall and rise and ultimately reach the door of freedom 🚩(hopefully by the time we retire), so that our assets come in handy to meet the shortfall.
Just like a baby learning to walk, falls a lot of times but keeps getting up and never gives up.
If building assets is such a no-brainer, then why do we struggle so much?
We expect the assets to not lose value at all. But that's hardly the case. The assets rise and fall but not all of them do so at the same time.
Here is a graph that shows the price fluctuations in Gold vs Nifty from 2008 till date.
There are trends we see in the way the assets behave and therefore, the idea of creating long term wealth involves identifying that some assets may lose value but not all of them behave the same way all the time.
How do you build your assets?
