Assets

In simple words the term "Assets" means, anything which generate money automatically or put cash in your pocket is called Assets such as Real estate, Mutal funds, Bonds, Savings, Gold, Diamonds, Business, Income from royalties etc.

All these assets we mention above are man made assets, created by a man, but the biggest and one of the most valueable assets which is provided by god to every single human being on this earth is TIME.
I repeated so many time in my articles that it is the TIME which make things valuable.
So, when you invest somewhere always give some time to your investments to grow and give you better returns.

             INVESTMENT x TIME = VALUABLE ASSET CLASS

The golden rule of investment is that the more assets you have, the more liabilities you can afford

Let's we take an example of Deepak.
Deepak is working in Marketing company and getting salary Rs 25,000. He did not have any kind of asset but after savings of last five years he can able to accumulate Rs 5 Lakhs in his saving account. Now he decided to buy a car. He have two options, either he buys the car cash from his savings or he go for some car loan from bank with nice interest rate. We analysis both cases

In Case 1 :  If he buy a car cash from his saving than he lost all his saving which he accumulate in last five years after working very hard.

In case 2 : If he go for a car loan than he have to pay Rs 5000 (approx) monthly installment which he have to deduct from his salary and have to survive with Rs 20,000 for next five years.

But here Deepak choose the third option after getting advice from good financial consultant.

He decided to buy a piece of land of 2000 sq ft for Rs 5 Lakhs and decided to keep this land for 10 years. As we know the population of world is increasing day by day and the demand of all basic needs are also growing, so he should expect a good returns ( approx increase of 25% to 30% annualy ) of his investment which he had it made today.

But if he is a smart investor and he invest the same amount to buy an apartment or a building which he can be able to give on rent of Rs 3000 to Rs 5000 monthly than he should earn a extra income from his investment and after a period of 10 years also expect the same returns mention above.

Now Deepak can be able to buy a car. He can go for a loan from any bank and pay the loan EMIs from the rented income which he is getting from his investment on real estate. Now he have a car and also have an asset which can grow day by day and also provide a steadily passive income for him. 

After five years when he clear all the amount of car loan he can go for another loan to create another assets.    

The above calculation is just for an example. One can also buy a land and construct a building on that, depends on individual.
But the idea behind all this, to divert the loan amount EMIs to your rent income which you generate from your investment in real estate.