An Asset Is A Golden Goose

By Joshua Mou


How long would your money last if you stopped working?

Many people are visiting because they can barely make it to their next paycheck. Others have some savings, but they could only live on those savings for few months or a few years. Some are fortunate to retire with a big pile of savings that could last for 20-30 years. However, even they constantly fear unexpected events that could eat away at their savings faster than expected.

As a child, I heard a story about a goose that laid a gold egg every day. “How wonderful,” all the owner in the story proclaimed because he was very fortunate indeed. The story ended with the owner of the goose killing his goose to get to the gold eggs faster than they were being laid, he found no more eggs inside, and he lost his stream of gold. The intended lesson was that greed can lead to loss. However, even more important was the mere existence of a golden goose. The story’s goose was fictional, but there are facsimiles of that goose in real life. These real life golden geese are called assets and assets are available to everyone.

Possessions Are A Burden

The term “asset” gets thrown around casually. How many times have well-meaning people used the clichéd phrase, “Your house is your biggest asset?” People, including my younger self, commonly list cars, boats, clothes, and furniture as assets because they are symbols of wealth.

Personally, I realized a few years ago, that if I lost my job, all of those possessions would suddenly become a burden. How would I feel about my mortgage or car payment if I had no income. Would having a $4000 sofa feed my family? Would having a second, third, or tenth tailored suit pay my heating bill? I think that everyone reading this can clearly see what took me years to realize. A $2000 mortgage, a $65 house insurance policy, a $400 car payment, a $100 auto policy, a $200 phone bill, a $50 gym membership, and a $140 cable bill would all become an albatross when there is no income to feed it. The truth is that a lot of what I called assets were mostly just expenses. Understanding the difference between an asset and an expense was one of the keys that helped me to start building long-lasting wealth.

Assets Generate Income

An asset is something that generates money. A factory that produces auto parts, which can be sold for money, is an asset. An office building that gathers rent from a tenant is an asset. A treasury bond, which pays interest, is an asset. A company’s employees are assets because they help to generate profit. A copyright on a popular song is an asset. See the theme? If something keeps making money even when the owner goes on vacation, then it is an asset.

Assets Provide Options

Consider a scenario in which you have lots of assets paying you a regular stream of income. If those assets paid enough income to cover your expenses, then you could quit your job! This would be a dream come true for most of us. A few of you may think, “I like my job, so I don’t need that dream scenario.” These hard workers get a lot of fulfillment from being productive and enjoyment from their labor. That is a dream scenario as well. But, what if a family member gets cancer and you need to leave work to care for that person full time? Suddenly, your priority may switch from a great career to spending time with a loved one. Assets give people the option to work–if they want to work.

Those with lots of assets, can also do a lot of good in society. Usually the assets themselves perform important functions in society. More importantly, assets allow their owners to have more money to contribute to charities and more time to volunteer for good causes.

Assets Are Safety Nets

How would you feel if you were laid off at work? Probably shocked, angry, and a little scared.

The worse-case scenario that I want people to avoid is the dilemma of losing a job and being forced to make hard decisions just to survive. If a person gets laid off from a job and does not have other sources of income, tough choices need to be made. It could mean taking on jobs that are undesirable. It could mean uprooting a family to move someplace where there is an available job. It could mean losing a home. It could mean choosing between medical care and food. Even those who have jobs often have to accept lower pay or unfulfilling work just because they cannot risk losing their job. How would any of these circumstances feel if one was only three years from retirement?

Assets produce life-changing income. If someone owns dividend paying stocks that provide an extra $500 to $1,000 each month, those assets can be the difference between eating and starving. That income can help make the housing payment. That income can prevent the need to spend retirement funds. That income can also buy extra time for a person to find a better job. For the less desperate, that income can be used to buy more income-producing assets.

Think about what a difference a $1000/month stream of cash from a couple of rental properties would make. Sure, $1000 would not pay all of your monthly expenses. But, instead of having to get a great job right away when all of your former colleagues are also looking for jobs, you could get by on savings or with temporary work. What if you had another $1000 in monthly dividends? Then you would be even closer to covering your expenses, and you might only need to be a part-time greeter at Walmart to make ends meet. In desperate times, many people could cut their expenses to match their asset income. Any additional work income becomes a luxury. Suddenly, the loss of a job is not a catastrophe anymore.

Assets Allow Earlier and Longer Retirement

Most of you can now picture the benefits of asset income. But, why not just work for 40 years and save a big pile of money? This is the way that many people fund retirement, and it can definitely work. However, what if you do not get to work a full career due to health or social reasons? What if there are disruptions within a career that cap your savings? Also, people who do not learn the concept of assets will not be able to make their savings last as long in retirement.

Accumulating Assets

At this point, one must ask, “How do I find and buy assets?” In the article, “10 Reasons That Stocks Are The Best First Investment,” I introduce investors to a low-cost education about investing—the act of buying assets. I like starting with stock investing because it teaches the core principles that help people understand every other asset. Stocks are also readily accessible and they can be bought with just a few dollars. For most, stocks will be the only asset that they need for retirement. But, before jumping headlong into an investment, I recommend keeping a tally of your assets which I describe in the next paragraph.

Here is an easy challenge for all investors: Write down all of your sources of income. Add up all of your work income, interest payments from savings accounts or bonds, dividends from stocks, income from side jobs, alimony, income from rental properties or any other investments. Then place a check mark beside any income that would continue  if you went on vacation. Anything with a check mark is an asset. As you progress in your investing journey, you will notice that more and better assets lead to more financial security.

If you have a lot of check marks, then you probably already feel financially secure. You have a lot of assets that can support you in difficult times and in retirement. You rely on work income less and less. Those who have very few check marks beside assets probably feel the stress of needing to work more to make ends meet. You may have to work for a long time to retire. You may be retired but notice that your money does not go as far each month. No matter which situation you are in, investing in assets will improve your financial life.

Your next step is buying those assets. The process of buying assets is called investing. That is what this journey is all about.

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