The secret lies here: you need to distinguish between assets and liabilities. Rich people have a lot of assets, while poor people have a lot of liabilities.
Assets: Assets can be categorized into tangible and intangible types.
Tangible assets consist of physical items like buildings, machinery, and vehicles.
Intangible assets don't have a physical form but generate economic benefits, such as land use rights, copyrights, and patents.
Liabilities: Liabilities are assets that depreciate over time and do not generate future value or profits. Common examples include mobile phones and cars, unless used for business purposes.
Importance of Differentiating Assets and Liabilities: Understanding this distinction is crucial for personal financial management, focusing on investing in assets for profitability and minimizing spending on liabilities.
