The difference between being rich and being wealthy is a difference in ownership. You can be rich and wealthy, or you can simply be rich or simply be wealthy.
A massive and typically misunderstood or unseen part of our capitalist system is ownership. One of the simplest distinctions between capitalism and communism was ownership. Who owned or created the assets/wealth, How would those assets be used ? what would they create ? how would society and people most effectively be organised to get the best results ? how would people own assets ?
Now this is not a political entry. Our only interest is pointing out a key distinction between communism and capitalism is to develop our own understanding of economics for our own personal growth.
Being rich is about cashflow, You have an extremely high income. You may or may not own any assets (A valuable thing that produces cashflow) You may have a personal brand (be a youtuber etc) or an extremely successful salesman.
The basic definition of an asset is something that
A) Appreciates in value or produces cashflow
B) And Can be sold
If it doesn't fit those two criteria it is not an asset. This is why a personal brand isn't an asset (In the traditional sense) because a personal brand can't be sold.
What is a liability then ?
A liability is a thing that was suppose to be an asset but now isn't. In the most technical sense it is a thing that was suppose to appreciate in value, produce cashflow or be sold and isn't or wasn't.
This brings us to the next point of wealth creation. Investors typically don't create wealth. If we define wealth as assets ownership and investors typically don't create wealth. Its businesses that create wealth. Business create the product and are the stocks investors own.
An investor can start a company with the purpose of buying,selling and holding assets but this isn't creating wealth and we shouldn't confuse building a house with owning a house. They're two different things.
They're early investors and start-up investors which are extremely valuable to the economy. There're so many extremely productive business which provide essential services which simply would never have gotten off the ground or been as huge of a benefit to society without start-up investors.
but most investors only service either themselves or the already rich and wealthy. All they really do in the economy is cause things to appreciate in value via speculation.
There's a stock that cost £10. In one month I think its going to cost £20 so I am going to buy it now so that in one month when I sell it I made money from it. Or, This business is paying out X amount in dividend, I am going to buy it and get paid money for owning a piece of this company.
Those are the basic lines of thinking of an investor. These lines of thinking can have more complications and technology involved but the basic/underlying line of thinking stays the same.
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