What Are Assets And What Are Liabilities?
Anything that appreciates (value increases) over some time is considered an Asset.
Anything that depreciates (decreases in value) over some time is considered a Liability.
Why Accumulate Assets And Avoid Liabilities?
When you start and don’t have any money, I highly recommend improving human capital. Your human capital would be your best asset to leverage to achieve financial freedom.
When you consider investments, there are several assets to invest in. Each asset has some pros and cons. The best asset to buy depends on your risk profile, time, knowledge, and unique circumstances.
1b. Fixed Income (US Treasury, Certificates of Deposits, Bond Funds, Peer-to-Peer Lending)
Bonds, Certificates of Deposits (CDs), or Peer-to-Peer lending typically provide cash flow in the form of interest payment because you have lent the money.
Unlike Peer-to-peer (P2P) lending, asset-backed lending involves making loans against an asset. It would be best if you found out the value of the asset. And loan only up to a certain percentage of that asset.