Financial Investing is not something everyone takes seriously or really look into properly. This is because, it's not something that we are taught properly in school and rather than take the time to learn and more importantly practice the subject properly, we rely on so called 'experts' or even worse family and friends that we think will be able to give us the best advice.
To most people, investing would include buying their own house, maybe even a second property, putting their money in a high interest savings account or putting money in mutual funds. These are things we are usually advised to do and in fairness there isn't necessarily anything wrong with any of them. Some of them may in deed work out in your favour, but if you really take the time to acquire a little financial education, you'll start to realise there are 'vehicles' that can be much more lucrative.
So what should you be investing in? And the simple answer is "Something that gives you an 'ongoing' return." - This is how you define a 'real' Asset. Let me emphasize the term 'ongoing', you see many would have you believe that an Asset is usually a 'long term' investment that you will be able to sell on for profit or pass on to your family later on. Now, there's nothing wrong with having that long term view in mind, but if the item in question is not giving you a regular and ongoing return (profit), it is not really an Asset to You.
Simple examples of such Assets would be a Business (Revenue), a Rental Property (Rental Income), a Stock (Dividends). - What may not be so simple however, to inexperienced investors at least, is that it must be giving you a regular ongoing profit i.e. more than breaking even. - Regular can mean; daily, weekly, monthly, quarterly or even annually.
So lets use the first 2 examples to illustrate this;
A Business:
Most Businesses will have overheads/expenses in order for it to run, such as rent for the premises, staff wages, utility bills, stock purchase etc. If the business is generating revenue which covers all of those expenses and leaves you with a profit...The Business is an Asset to You.
A Rental Property:
Unless you have bought the property outright, you will more than likely have a mortgage or other form of loan against it. Depending on the type of property and location, you may also have additional costs such as ground rent, service charges and maintenance. When receiving the rent from your tenants/clients, you are able to cover all of those costs and still have remaining cash after (profit)...The property is an Asset to You.
Smart and experienced Investors will do their homework before investing in anything i.e. they only invest in real Assets, determining before hand that they will make ongoing profit. They still have the option of selling/passing it on in the future, but while it's putting money in their pocket that's something they can 'afford' to concern themselves with later...
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