Wealthy Mindset Series #15

Investable vs Personal Use Assets  

As you know, one of the most important keys to creating wealth is the right attitude. In Series #14 we spoke about how the wealthy are willing to share what they know. They come from a prosperity consciousness not a poverty consciousness.

In this series today we will talk about how the wealthy focus on investable assets instead of personal use assets, and I will explain the difference.

When your CPA or Financial Planner says your house is an asset, yes, that is where you list it on a Balance Sheet, but it is not an investable asset for your financial freedom. It is a personal use asset.

When a wealthy person looks at a Balance Sheet they are looking to see what investable assets they have. What they are looking for are the assets that generate an income. An asset that provides an income to you allows you to choose to work instead of having to work.

Investable assets are things like money in the bank, stocks you own, bonds that pay interest, real estate investment trusts, triple-net-leases, tax liens you own, life settlement investments, annuities, apartment buildings, office buildings, an operating business and more.

Personal use assets do not provide an income; you use them personally. They are things like your automobile, furniture or jewelry, or as I mentioned earlier, the house you live in.

You might say to me, “I purchased my home for x, and now it is worth 2x. How can that not be an investable asset?” Easy, if you sold it to capture that gain, you still have to have somewhere to live, so you might buy another house.

And any house you own, and live in, generates expenses and not income. Even if your home has no mortgage you still have property taxes to pay, insurance, utilities, and repairs. Your home creates expenses, not income. The exception would be if you rent it out to boarders or for AirBnB use.

The wealthy mindset understands the difference between investable assets and personal use assets.

Create a list of everything you own and measure the amount of investable assets you have. That will give you an idea of how close you are to creating financial freedom, where work becomes a choice instead of a requirement.

In the next article of the series we will talk about the importance of language. The words we use not only influence others, but guide our own thoughts and actions as well.

To your prosperity,