Asset vs liability:
Being rich or poor is always determined by the financial decisions we make in our day to day living. In this post, we shall be looking at ‘asset vs liability’.
I will use a post I found on social media, whose author I do not know. The post offered insight into the financial decision of two popular Nigerians and how things turned out for them on the long run. Sir Shina Peters is a notable afro juju musician while Jim Ovia is a business man. See how the decision they took years ago affected their today:
“In 1990, Sir Shina Peters built a house with 20 million naira. The same year Jim Ovia started Zenith Bank with the same amount. Today, you and I don’t have a room in Shina’s house but I have an account in Jim’s bank and probably you do too.
Shina’s house was built in Iju Lagos and remains there till date, but Jim’s bank started in a corner and now has over 500 branches in Nigeria, and many international branches.
Millions upon millions transact business in Jim’s bank daily while Shina’s house is becoming dilapidated. In 2015, he SPENT more money to renovate the house and bought a Nissan Pathfinder with N10 million – additional liability, while in the same 2015, Jim’s bank MADE a profit of N105.7 billion.
Zenith bank employs hundreds of thousands, and feeds their families.
I am NOT in any way trying to disparage the personality of Sir Shina Peters. He is a great man in his own right and well respected. I only wish to demonstrate the difference between an investment and a liability, and the long term impact of a single financial decision.
If you buy a car for 20 million naira today, in 20 years’ time, you will be ashamed to drive it. On the other hand, if you invest that same amount in a lucrative business or in an asset, it may be worth billions in 20 years. (Jim Ovia is now worth $980 million dollars, with the official dollar rate of N320, that means he is worth N313 BILLION NAIRA because of an investment of N20 million).
Spend the little money you have today wisely. Some people driving expensive cars today are not aware that they are driving their future and the future of their children. Some people carrying iphone7 today may not be aware that they are carrying their future.
When you are young, don’t spend money. Invest it.
Every penny in your hand is like a seed, you can decide to eat it, or sow it. When you sow it, it will bear much more seeds later in future.
Your earnings will not make rich, no matter how much you earn. It is your investments that will make you rich. This is why many top musicians, celebrities and sportsmen yesterday, are broke today. They think their earnings are wealth, but once their earnings dry up, their expensive lifestyle quickly bankrupts them.
On the other hand, investments never dry up. Whether you are awake or sleeping, retired or active, your investments keep pouring money into your account. This is the simple secret why the rich get richer. Rich people invest money in assets. Average people spend money on liabilities…”
Asset vs liability
In a nut shell, spend less on liabilities but spend more on investments. Liabilities take money away from you and will sooner or later make you poorer, so run away from them. In everything, think about tomorrow. Expensive phones, cars, gadgets, exotic lifestyle and reckless spending may not be the right thing for you now.
Embrace investment. Spend more on things that will increase your worth. Spend on education, skills, trainings, businesses and productive machineries. These will guarantee a better tomorrow for you. It is never too late to start investing, so start now!
Learn this lesson well, and your later years will be golden.
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