15 Assets That Are Making People Rich

Assets put money in your pocket; liabilities cost you money. The more assets you have making money for you, the richer you are. This is the fundamental rule of getting rich. But that said, here are 15 assets that are making the rich even richer. Welcome to Alux, the place where future billionaires come to get inspired.

Starting off at number one: cash. Straight-up cash put in a bank deposit is earning you interest. Pretty straightforward. The downside is, though, the interest paid up by banks these days isn't even keeping up with inflation. But cash is still a priority. Apple, the company, has over $150 billion in cash reserves; that's liquidity.

So why do rich people still keep a good portion of their wealth in cash reserves? Well, two reasons. One: being able to access any opportunity that presents itself, which is pretty self-explanatory if you think about it. The deal of your dreams is in front of you, and you don't have the money to take advantage of it—that would suck. This is also the main reason why rich people save cash.

Two: because they can get higher returns from straight cash deals. Not only do people offer better pricing for cash, but you can also lend money with high interest. This practice is called peer-to-peer lending. If you're low on income and willing to take this risk, there are plenty of platforms out there that offer peer-to-peer lending services. Basically, you lend people your money, and they pay you back with interest.

The average bank is offering under 1% interest on your deposit, while peer-to-peer lending fluctuates from 7% to as high as 15% or 20%. But please keep in mind that if something is too good to be true, it probably is. Maintain a rational mind whenever investing.

Number two: real estate. This is a big one; we personally love real estate. Why? Once again, two reasons. One: rent payments—money is coming in every single month with a minimum amount of work. If you're a bit smart, you can take advantage of the technology improvements happening right now and, instead of traditional rents, do short-term rentals for higher yields—but it isn't as passive.

Two: the second argument is appreciation. Population numbers are going up, and more and more people need a place to live or rent. The demand is increasing, so prices for properties are constantly going up, and they forever will, making real estate one of the better investments that you could possibly make.

Now, in terms of real estate assets, you've got: one: residential buildings—where people live in your properties and pay you rent; two: office buildings—people work in your property and they pay you rent; three: commercial buildings—businesses use your space to sell stuff and pay you rent; and four: land—which can be cultivated, developed, or even left as it is for appreciation.

Now, super important here: the house you live in is not an asset, okay? It's a liability. It costs you money to live in it and it's not putting any new money into your pocket.

Number three: bonds. When governments or businesses might be in need of some cash, they can issue something called bonds, which are sold to interested investors. Now, through these bonds, the government or business vows to pay the person buying the bond a certain amount of money every month. Generally, bonds have an expiry date on them, from 1 month to 30 years.

These are super safe investments because they're mostly backed by the government. As you probably know by now, low risk in business translates to low reward as well. Bonds are usually in the 3% yearly return range, which is better than what most banks offer but not high enough to get a beginner investor excited. When the bond reaches its end, the principal amount is returned to the investor.

The main ways that people buy bonds are: one: directly from the Treasury Department, or two: through a brokerage firm.

Number four: stocks. Now, stocks are not as complicated as all those Wall Street films make you believe. Stocks are an easy way for you to own a percentage of a publicly traded business. So if a business issues 10 million shares and you own 1 million of those shares, you're a 10% owner in that business. This incredible breakthrough in financial instruments has allowed the average person to own a stake in some of the most lucrative companies of our day with very low entry barriers.

Here's how much you need to pay to purchase one share into these companies.

Number five: mutual and index funds. If stocks allow you to purchase shares in a company one by one, mutual and index funds bring multiple companies together so you're buying into the entire basket of companies as a whole. Why is this better? Well, basically, you're more diversified, so it's a safer investment to make. Statistically, index funds are one of the best performing asset classes.

The five most popular index funds are the following, in no particular order: Fidelity Zero Large Cap Index, Vanguard S&P 500 ETF, SPDR S&P 500 ETF Trust, iShares Core S&P 500 ETF, and Schwab S&P 500 Index Fund.

And look, okay, here's the deal: if you were to start buying stocks one at a time, you're statistically more likely to screw it up. You're not going to be one of those miracle traders that beats the market year over year. You don't have that kind of info, and it's super complicated to try and compete with the big boys. That is where the index fund comes in.

S&P 500 brings together the best 500 performing companies, and when a company falls from that top 500, it gets replaced with a new, better performing one. The average annualized return for the S&P 500 index over the past 90 years is 99.8%. Out of the five mentioned, Vanguard is our top pick. Index funds should be in every portfolio of everyone who's looking to build wealth long-term.

Number six: equipment. Anything that generates money for you or helps you make money faster is considered an asset. If you're a farmer, a tractor is an asset. If you're a programmer, that laptop is an asset. If you're an Uber driver, your car is an asset. Whether or not something is an asset or a liability changes depending on whether it has a direct correlation to the money you are generating. So unless your income is directly dependent on the car, buying a new one is a liability.

It's very often that people confuse the two; they try to justify it as an asset when in reality they're mismanaging their own finances due to a lack of self-control. You don't need the most expensive laptop on the market to watch YouTube videos.

Number seven: patents. Patents are awesome! Okay, for those of you unfamiliar with the term, when you invent something new, you can protect that invention by filing a patent. It's a document that certifies you as an inventor and describes in detail what your invention does. With this protection in place, companies have to pay you money in order to use your invention, and if they don't, you get to sue them.

Patents are incredibly powerful and valuable in the business world. A single patent can make you rich, and all the best inventions are backed by patents. Just to put things into perspective, here's the most US patents received last year. But you know, it's not just big companies that rely on patents. Remember the Slinky? It made over $3 billion in sales. Scott Singer invented the Cush Ball, which was bought by Hasbro for $100 million back in '97.

The moving fish you saw on everyone's wall years ago called Big Mouth Billy Bass was also worth over $100 million, and the list goes on like this: the Magic 8-Ball, hula hoops, and anything you've seen on Shark Tank or the teleshopping channel.

Number eight: trademarks. If patents protect your invention, trademarks protect your symbols, words, or phrases. It's pretty obvious why this is a big deal when it comes to the logo or the name of a brand. But here's where things get super interesting: if you own a valuable trademark that has marketable value, you can license it to people to use it for commercial purposes, and they have to pay you in return.

Our all-time favorite is the story of Michael Buffer, who in 1992 trademarked the catchphrase you can see right now on the screen. I'm not going to say it, but chances are you can hear it in your head. It's super catchy, entertaining, and every single time it's said in a commercial manner, you need to write Michael a check.

Since trademarking it, get this: okay, he's made over $400 million just from that one catchphrase. And you know, trademarks can be local or international, but good luck enforcing it. Just to keep things interesting, one in five US companies says there are companies in China infringing on their intellectual property, and this is actually one of the main reasons why China has been growing so quickly—the complete disregard for intellectual property rights.

China is stealing over $600 billion in IP from the rest of the world every single year, which is wild. Okay, but let's get back to the topic at hand: more assets that make you rich.

Number nine: brand and goodwill. Now, there are subtle differences between brand and goodwill, but both are very valuable to any business. A brand is the footprint a company leaves in the minds of its consumers—what they stand for, how they present themselves. Goodwill is the emotional affection people have toward the brand.

A brand is owned; it's an effort the company is making to push a particular image of itself into the marketplace. Goodwill comes from the way the company treats its customers, the positive impact it has on the community, and how grateful people are that the company exists. Goodwill is super hard to cultivate or scale, but people will literally save companies from bankruptcy because of the goodwill they have for it.

There are companies that become incredible successes just through branding. The Kardashian family is a great example here. If Kim or Kylie attach their name to something, it can drive sales like nobody's business. We're not sure if Kylie's lip kits are any better than the competition's, but it did make her a billionaire. Also, remember when Kim Kardashian made over a million dollars per minute from her Kimoji app? That was nuts!

Now, of course, there are other examples that might even drive this narrative better. Take a simple black t-shirt, for example. You can buy them for less than $2 a pop, but put a Disney logo on there, and now they're worth $10.99 just because of the intangible value that brand brings to the shirt.

Number 10: people. You don't realize just how valuable an asset that people are until they leave. Very few people understand that companies aren't actually real. Companies are a figment of imagination validated by the state. Companies are names, ideas, and the innovation happening under this imaginary umbrella.

And who comes up with all of these? It's the people in that company. A single person can shift a company with their ideas. Just look at the impact replacing Steve Jobs with the former Pepsi CEO had on Apple—nearly bankrupting what is today probably the most loved technology brand. And digging deeper into Apple, their lead product designer, Jony Ive, designed the products that are now in the hands of billions.

Then there are the teams that make the company as a whole. There have been cases where bigger companies have acquired startups just to bring those people in-house. There's actually a term for it: it's called aquihire. Hire the right people, and they'll make you rich. Ideally, nobody in your company should be irreplaceable, but the harder someone is to replace within an organization, the more valuable an asset they become.

And if your goal is to position yourself this way—if you want to be one of the most valuable assets at your organization—we've got you covered with the Alux app. With a subscription, not only do you get access to a fresh coaching session every single day, but you've got access to over 100 curated collections of lessons designed to have you reach your goals in a fraction of the time it would take you otherwise.

There are two specific collections I'd like to highlight for you now because they'd be perfect for this: one is called Pep Talks for Your Promotion; the other I Want to Advance My Career—and they're included with your subscription to the Alux app. And as a little bonus, scan the QR code on screen and you'll get 50% off your yearly plan.

Number 11: raw materials and commodities. The price of raw materials and commodities fluctuates and varies depending on the market. If you're smart about it, you buy it when it's cheap, hold it, and then sell it when it's in high demand. This applies to everything in life: from currency to oil to gold to crypto, luxury cars, and art.

Over the past 15 years, the price of gold has increased by 221%. This might come as a shock to most of you, but we love art as an alternative asset class. Very few people know this, but art has been outperforming the S&P for the last 20 years. This is one of the big reasons why you see the wealthy dropping stupid money on art because it's making them even richer.

The same goes with vintage cars. While your car is costing you money, some of the wealthiest people in the world are buying rare vintage cars that are quickly appreciating in value. The same goes for other collectibles like luxury watches. Now, before you go and blow all your money on a vintage Rolex because you read some post on Kwora about how they double in value over time, you might want to take a quick breather.

Never invest in things you do not understand; it's one of the most important rules of money. Disobey it, and you'll never be rich.

Number 12: books, songs, digital courses, information, or content. Information is an incredible thing to be selling because it's infinitely scalable. You write the book once, and then you can sell it a million times. The same goes for a digital course, a song, or any other type of info or digital product.

Creating and distributing such an asset increases not only the value of the business but can also make you rich. The moment your product is done, your job is to promote it and get it in the hands of as many people as you can. With music, it's even more interesting because you only have to get it right once, and you could literally be set for life.

Gangnam Style is a good example of this; one, Psy made over $10 million just from that one song distributed via YouTube and iTunes, not to mention merch, shows, licensing, and so on. Mariah Carey makes around $500,000 every single year from one hit song you all know and love: "All I Want for Christmas." That song alone has made her over $60 million to date.

And on a similar note, number 13: royalties. Now, we've brushed a bit on royalties in the previous points, but there's an entire world revolving around them. The simplest way to put it: you wrote a book—that's great. A movie studio wants to buy the rights to your book and make a TV show out of it. In exchange, you're getting a portion of the money generated.

Let's say the TV show is Friends. You've made a ton of money already; the show wraps up after 12 seasons, and you're already rich. But it doesn't stop there—no, no. There's a term called syndication. That's when a TV show becomes so big it makes sense to open it up to multiple broadcasters.

So keeping with a Friends example, the cast of the TV show is still earning to this day between $1 million and $20 million per year from the reruns of the show. That's insane! Royalties apply to everything that has to do with your intellectual property. Royalties made George Lucas a billionaire when he proposed Star Wars to studios. They didn't give it much thought, assuming it was likely going to flop.

Instead of paying George $500,000 in director's fees, Fox allowed Lucas to maintain the licensing and merchandising rights. Long story short, the movie is a massive success, and by 2011, the toys and merch had brought in over $3 billion. In order to make up for their mistakes, Disney bought Lucasfilms for $4 billion, and it took Disney just six years to recoup their investment.

Number 14: unique rights. Now, we wanted to mention this because there are instances where some parties might have an unfair competitive advantage, which counts as an asset. For example, in the US, there's something called the Indian Gaming Regulatory Act, which grants Native Americans the rights to all types of gambling activities regulated under state law.

Anything from specialty licenses to geographical advantages can be considered an asset if it grants you a competitive advantage in the marketplace. The church is another example since they don't have to pay taxes. This happens all over the world; in Eastern Europe, almost every church is run like a business. They have products, merch, services that cost money—all tax-exempt. The same goes for art museums and fraternal organizations.

And number 15: first mover advantage and proprietary business models. Whenever you innovate in a commercial manner, this innovation is regarded as an asset. The App Store by Apple is one of those innovations. The microtransactions in games are a new business model. The fact that Netflix evolved from delivering solid tangible DVDs to a streaming service has been regarded as a very valuable asset for the company.

It gave them the edge to capture market share while everyone else was still on the sidelines. It took a couple of years for other companies to catch on, and now streaming services are everywhere. The same thing happened to music; you used to purchase physical albums, then digital albums, now you just pay for Spotify, Tidal, or YouTube Premium.

Airbnb disrupted the hotel industry with a new way to rent short-term accommodations. Your job is to figure out a way to take advantage of any of the assets mentioned in this video and secure a bag for yourself.

If you made it this far into the video, we're curious to know which of these assets do you plan to secure in the future. We can't wait to hear from you in the comments. And we know, okay, this was a long video, but it was filled with educational value, and we hope you got your time's worth. For those of you still watching, here's a bonus piece of info: the time-money-time arbitrage.

So this is one of those things they don't teach you in business school, but if you pay attention, it's probably the most valuable thing you'll ever learn. At this point in time, you might not have the financial resources to purchase all the assets we mentioned, but you've got an asset that you can exchange for money. And from the subtitle, you probably figured out we're talking about time.

Okay, so the time-money-time arbitrage is when you use time to generate money, then use that money to buy other people's time. That's how you exponentially grow time working for you. Now, I know it might sound a bit confusing at first, but we'll break it down for you. Pay attention, because this is valuable.

Basically, your job is to identify opportunities where you can convert time into money, and you do that for some time until you have enough money to bring in another person. Because you've generated this opportunity, you can pay this person less than the money you're earning for that time and pocket the difference.

This is a fundamental business lesson; it's why every single company has employees. Every single person in an organization is generating more value for that company than they're being paid, and that company is keeping the difference. This is called profit. This profit is the reward for solving that time-money-time arbitrage problem.

So if you're new to business, work your ass off trading your own time for money, and then figure out how you can use this arbitrage to build a real business. Every business owner out there understands this methodology, but very few other people know about it because, well, they're not thinking like a business owner. Now you do!

And we look forward to finding out what you're going to do with that information. If you've made it this far and you understand the time-money-time concept, please write TMT in the comments of this video. Everyone else will be baffled by your comment, but we will know who the true Aluxers are.