“Everyone Ought To Be Rich” – John J. Raskob
John J. Raskob, financial executive for DuPont and General Motors, and builder of the Empire State Building, uttered those famous words a few days before the Great Depression hit the United States. Close to 100 years later, it’s still applicable for many.
Like Mr. Raskob, I am firmly convinced that everyone ought to be rich.
I will not debate the definition of “rich”. For this article’s sake, rich refers to financial wealth.
But what does it take to be called “rich”? How can a person become rich?
I believe there are 3 elements.
First is having a home of your own to shelter your family. While people are more mobile today, the vast majority of rich people own their homes. In fact, some of them own large mansions and estates. While having a home (or a large mansion) does not make you rich, not having the ability to own your home disqualifies you from being called rich.
While renting may be a choice, your family should have the capability to own their home if something happens to you. They may not want to rent especially when you are retired and no longer earning active income.
Renting may make sense in the short term but it does not provide your family security over the long-term. What would happen to them should you lose your job or should you decide to retire? Can you keep up with rising rental payments? What if the landlord decide not to renew your rent?
It just makes sense to make home ownership a prerequisite to being rich, doesn’t it?
The second prerequisite for being rich is having passive income that gives you financial freedom.
If you are dependent on your salary alone to fulfill all your needs, then you are putting your family at great risk. Truly rich people have passive income that can cover their wants and needs should something happen that prevents them from getting active income.
Having passive income also allows you to take vacations when you want to and where you want to. That is being truly rich.
The third prerequisite to being rich is having investments that grow with time. As inflation eats up wealth automatically, your estate must grow automatically as well to keep your wealth intact.
Also, if your expenses increase due to inflation, your passive income should grow as well – automatically. If it doesn’t, then you’re at risk of losing your wealth over the long-term – swallowed up by inflation.
Fortunately, getting rich is simple with real estate. You buy your home first and then buy real estate for passive income for the rest of your life.
Real estate increases in value over time – whether it’s land or a condo.
The rental income also increases over time, insuring you will keep your wealth in the future.
If you want to be rich, you definitely need to own real estate. If you don’t have real estate in your portfolio, start adding it now.
(Article originally posted in remaxasyenda.com)
P.S. What is your definition of rich? How do you become rich? Let me know in the comments.