The Money Of The Rich And The Wealthy: Where Is It Going?

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We always hear the phrase, the rich becomes richer and the poor becomes poorer. I too have exclaimed this before.  I really don’t understand why the rich is getting richer while we on the other hand remain stagnant and dormant. In terms of wealth accumulation, the rich seems to have more leverage than the rest of us. What have we been doing wrong all this time? What sets the rich and the wealthy different from us?

Yesterday is payday. I am certain many went to the ATM machines to withdraw and proceed immediately to off debts. You do not want your debt to pile right? Some will go to our suking sari-sari store to pay former debts incurred. Some would go to pay our house loans, car loans, cooperative loans and some other loans. Add some fancy dining in a restaurant and even more do some grocery shopping. Then wait for days again until the next money would come in. Rinse and repeat. And the cycle continues. While there is nothing wrong with these things, it is our money after all, but there’s always a direction where our money goes. It mostly goes to our liabilities and expenses.

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So let us define first what is a liability?

According to Investopedia, this term simply refers to any money or service that is currently owed to another party. One form of liability, for example, would be the property taxes that a homeowner owes to the municipal government. Hence, this is simply money owed to others like our debts or our loans.

Then let us define what an expense is.

Expenses are the costs required for something or the money spent on something. In our example above, it is the things that we buy. Like the shoes, the bag, groceries and more. Have you ever wondered why every payday an officemate of yours would have a new set of clothes, or a new shoes or a new haircut? Those are expense.

So how are the rich and the wealthy different? Where are they putting their money?

The answer is they buy assets.

Let us define assets.

According to Investopedia, this is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.

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For the rich and the wealthy, they are using that money to buy assets that would generate them income. Good examples would be businesses, stocks, real estate, bonds and anything that would help them create more avenues to earn. No wonder that the gap between the rich and poor are growing by the dozen. Simply because the rich accumulates more assets whereas the rest are buying stuffs that would hold no value tomorrow and even worst could not help them earn in the future.

The rich and the wealthy still go to the mall to do some grocery shopping and buy stuffs. They are just like the rest of us. However, they are not allocating their entire salary for example to buy items that won’t benefit them in the long run. Majority of their money would be invested in income generating assets. No wonder as time goes by, they would have more sources of money apart from their job because the assets that they bought are the ones providing them already with income.

Rinse and repeat.

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