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I like how you defined heath, education, and intelligence as the raw materials, but they don't directly give you the return that will make you wealthy. You nee

I like how you defined heath, education, and intelligence as the raw materials, but they don't directly give you the return that will make you wealthy. You need to apply those skills in some way to make income generating assets, and that is the tricky part. For most people, including Robert Kiyosaki, income producing assets basically means buying and renting out property. I disagree with doing that on so many levels and also think it's a terrible investment in todays over inflated market. Another option is to save and make investments, but interest rates are currently so low that it's almost impossible to get escape velocity through low risk investments. That leaves us with entrepreneurship. That is why we are here and it is probably our best chance, but is never risk free and not a path that the average person will use to build wealth. This said, building wealth rather than accumulating savings is hard even if you are lucky enough to have all of the necessary ingredients and the right mindset. Your pillars of health, education and intelligence are important. I'm glad that I have them because whilst I do, I hopefully won't go hungry. They are a safety net. However, I don't think that those alone are a path to building wealth.

agscala 13y ago
What do you suggest is better than rental real-estate as a income-producing asset to invest in? Entrepreneurship is great and all but the risk is frighteningly high
- swombat 13y ago
  The risk is not so high, actually, imho: http://swombat.com/2012/6/18/entrepreneurship-safest-career http://swombat.com/2012/6/18/entrepreneurship-safest-career
  - ForHackernews 13y ago
    The risk is only not-high for people who have a decent safety net to fall back on (spouse, parents, or savings) and/or low obligations (i.e. your children won't go hungry if your startup busts) That's not to disagree with your overall point--yes, you won't LITERALLY DIE--but relatively few people have the luxury to keep swinging and missing in the hopes of getting a hit.
- mcdougle 13y ago
  dividend stocks seem great if you use dollar-cost averaging, DRIP investing, and you do the research necessary; they also seem like they take a very long time to build up a sizeable portfolio. I really like Rob Walling's description of what he does with software businesses [1] though, and my plan is to do something like that. [1] http://www.softwarebyrob.com/2010/06/24/websites-as-investments/ http://www.softwarebyrob.com/2010/06/24/websites-as-investme...
tomasien 13y ago
I think health is a wealth asset of it's own, because if you lack it you'll trade your wealth to get it back if possible. It also gives you the ability to turn your education and intelligence into more tangible wealth, which I will grant you isn't straightforward. But that doesn't mean they aren't assets. A house is like education in a way - it seems to have intrinsic value, you know what YOU paid for it, but the outcomes that can come from trying to sell it vary DRAMATICALLY depending on the how good you are at selling it (and the current market conditions). So it is with my bachelor's from UVa - there have been times where it has gotten me basically minimum wage work and times where it's gotten me $1000/hr jobs, all based on how clever I was about it.
Robin_Message 13y ago
You are right; I've worked out the "accumulating savings" part reasonably well, but the "building wealth" is still eluding me. Stock market index funds seemed to be a good answer in the past. By owning them, you share in the economic growth and income of your country (or another country or set of countries) as a whole. Although, the spectre of Japanese-style stagflation for most of the West makes this less appealing at the moment (although even with the flat growth of the past 13 years, there are still dividend returns.) Property is popular because everyone has to live somewhere, the old "buy land, they don't make it any more" proverb, and the funemplyoment nature of buying, improving, renting, and selling property.
- jonnathanson 13y ago
  I think a lot of people misunderstand what a pain in the ass buying and renting property can be. Unless one is wealthy enough to own multiple properties and have a full-time management company doing all of his work for him, he's going to be taking a fairly hands-on role. Most tennants are flaky. Our perceptions of such might be colored by the fact that -- I assume -- a lot of us here are white-collar professionals making respectable incomes, or who could quickly arrange a steady enough job if needed. Most people aren't like that. Those people are your likely tennants, again, unless you're wealthy enough to afford higher-end rental property. Then there's the legal minefield. Being a developer or landlord makes one person very rich very quickly, and that person is your lawyer. Especially in the Bay Area. People here pretty much threaten lawsuits if they made eye contact with a teenager on the sidewalk, or if their cat's not eating its food, or if they don't care for the weather on any given day. Source: I own a small apartment building in LA and sit on my HOA board in SF. I am the definition of a small-time real estate owner in the uncanny valley: not poor enough to not give a shit, but not nearly rich enough to do so, either. I'm not a full-time landlord; it's more of a nights-and-weekends thing. But it sucks up a not-very-fun proportion of my nights and weekends, and every now and then, it eats into my workday as well. I would recommend landlording to people born into significant wealth, who can buy multiple properties and let a management company deal with the headaches. I would not recommend it as an upward path for those who aren't prepared to make real estate a full-time job, and who can't afford to jump a few rungs up the ladder at the outset.
onebaddude 13y ago
>but interest rates are currently so low that it's almost impossible to get escape velocity through low risk investments. This period is not unique in this regard. Interest rate is always risk-related. There may been times of higher absolute rates on things like savings accounts, but the real returns and opportunity costs were similar. What I'm saying is, there are plenty of investment opportunities; the stock market just rose almost 30% in 2013.

agscala 13y ago

What do you suggest is better than rental real-estate as a income-producing asset to invest in? Entrepreneurship is great and all but the risk is frighteningly high

swombat 13y ago
The risk is not so high, actually, imho: http://swombat.com/2012/6/18/entrepreneurship-safest-career http://swombat.com/2012/6/18/entrepreneurship-safest-career
- ForHackernews 13y ago
  The risk is only not-high for people who have a decent safety net to fall back on (spouse, parents, or savings) and/or low obligations (i.e. your children won't go hungry if your startup busts) That's not to disagree with your overall point--yes, you won't LITERALLY DIE--but relatively few people have the luxury to keep swinging and missing in the hopes of getting a hit.
mcdougle 13y ago
dividend stocks seem great if you use dollar-cost averaging, DRIP investing, and you do the research necessary; they also seem like they take a very long time to build up a sizeable portfolio. I really like Rob Walling's description of what he does with software businesses [1] though, and my plan is to do something like that. [1] http://www.softwarebyrob.com/2010/06/24/websites-as-investments/ http://www.softwarebyrob.com/2010/06/24/websites-as-investme...

tomasien 13y ago

I think health is a wealth asset of it's own, because if you lack it you'll trade your wealth to get it back if possible. It also gives you the ability to turn your education and intelligence into more tangible wealth, which I will grant you isn't straightforward. But that doesn't mean they aren't assets. A house is like education in a way - it seems to have intrinsic value, you know what YOU paid for it, but the outcomes that can come from trying to sell it vary DRAMATICALLY depending on the how good you are at selling it (and the current market conditions). So it is with my bachelor's from UVa - there have been times where it has gotten me basically minimum wage work and times where it's gotten me $1000/hr jobs, all based on how clever I was about it.

Robin_Message 13y ago

You are right; I've worked out the "accumulating savings" part reasonably well, but the "building wealth" is still eluding me. Stock market index funds seemed to be a good answer in the past. By owning them, you share in the economic growth and income of your country (or another country or set of countries) as a whole. Although, the spectre of Japanese-style stagflation for most of the West makes this less appealing at the moment (although even with the flat growth of the past 13 years, there are still dividend returns.) Property is popular because everyone has to live somewhere, the old "buy land, they don't make it any more" proverb, and the funemplyoment nature of buying, improving, renting, and selling property.

jonnathanson 13y ago
I think a lot of people misunderstand what a pain in the ass buying and renting property can be. Unless one is wealthy enough to own multiple properties and have a full-time management company doing all of his work for him, he's going to be taking a fairly hands-on role. Most tennants are flaky. Our perceptions of such might be colored by the fact that -- I assume -- a lot of us here are white-collar professionals making respectable incomes, or who could quickly arrange a steady enough job if needed. Most people aren't like that. Those people are your likely tennants, again, unless you're wealthy enough to afford higher-end rental property. Then there's the legal minefield. Being a developer or landlord makes one person very rich very quickly, and that person is your lawyer. Especially in the Bay Area. People here pretty much threaten lawsuits if they made eye contact with a teenager on the sidewalk, or if their cat's not eating its food, or if they don't care for the weather on any given day. Source: I own a small apartment building in LA and sit on my HOA board in SF. I am the definition of a small-time real estate owner in the uncanny valley: not poor enough to not give a shit, but not nearly rich enough to do so, either. I'm not a full-time landlord; it's more of a nights-and-weekends thing. But it sucks up a not-very-fun proportion of my nights and weekends, and every now and then, it eats into my workday as well. I would recommend landlording to people born into significant wealth, who can buy multiple properties and let a management company deal with the headaches. I would not recommend it as an upward path for those who aren't prepared to make real estate a full-time job, and who can't afford to jump a few rungs up the ladder at the outset.

onebaddude 13y ago

>but interest rates are currently so low that it's almost impossible to get escape velocity through low risk investments. This period is not unique in this regard. Interest rate is always risk-related. There may been times of higher absolute rates on things like savings accounts, but the real returns and opportunity costs were similar. What I'm saying is, there are plenty of investment opportunities; the stock market just rose almost 30% in 2013.