All of us would like to have a lot of wealth and lead a happy and leisurely life. But everyone is not able to achieve this goal. There are a few who achieve and there are many who keep struggling to achieve.

Why is it that all are not able to become wealthy and rich? For this I realised it is necessary to understand wealth. There are two kinds of assets. Wealth creating assets which earn income for you and non-wealth creating assets that do not earn any income for you.

Let us take the example of a car. You have bought a car for your own use and are using it for going to office. This is an example of investing in a non-wealth creating asset. This asset is not earning any income for you. There are only liabilities like cost of fuel, maintaining it and if you engage a driver his salary.

The same car if you are going to rent it out as a taxi becomes a wealth creating asset. It earns income for you. From the income that it earns for you, you can meet the expenses like cost of fuel, maintaining it, etc., and also save the remaining income which is going to add to your wealth.

The rich think of investing in wealth creating assets and the others who are struggling to become rich invest in non wealth creating assets. This is the basic difference between the two categories – the rich and the not rich.

If you want to create wealth then think of investing in wealth creating assets. If you want to buy a non wealth creating assets, first invest in a wealth creating assets that will earn money for you to finance the cost of the non wealth creating asset.