People try to increase the net worth that depict the wealth. Net worth is the difference between the assets and the liability. A rich man may not have high net worth if he or she borrow money to buy asset. Off course, the high debt makes the people or unwealth. Example, Mr. Jordy has luxorious car, and big house but he lease the car. Each month, he has to pay two hundreds dollar while his salary is only $ 2,500. Meanwhile, his neighbor Mr Jones has no car. He just got $ 1,000 from the business but he has no debt. He has paid the house previous years. Though Mr Jones salary is lower than Mr Jordy, Mr Jones has higher net worth.
The higher net worth, the more rich people. There are some ways to increase the networth:
1. Increase the asset
This strategy is good for people who cannot reduce the liability side. They should work hard to increase the asset side to balance the liability side on the right.
Increase the cash stream by working for other company, opening a business, selling stuff at internet, selling the stuff at the garage, and so.
You can also increase the house. Buy some house and hire those house to the renter. The renter can pay the rent expenses each month or each year.
Beside buying house, you can also buy other aseet to keep your value of money. Buy some productive asset to increase your networth. Some plantation or livestock can make you money. The plantation can produce fruit and cereal and you can sell it to the market.
2. Decrease the liability
This strategy is fit for someone who cannot increase the asset. They have to decrease or reduce the debt so it can lift the net worth. Try to decrease the useless liability such as plasma tv, luxorious car, and other.
Settle the debt as soon as possible. Use your asset to pay the debt with interest. The high debt decrease your net worth and it may reduce the asset.
3. Increase the asset and reduce the liability
This strategy can increase your net worth fast. Surely, everybody can do it but the result may vary. Despite you have much money, you do not spend it for luxorious things. They prefer to save or invest more money to make other money. As consequently, the asset may increase because the asset can generate money.
Our investment such as stock, mutual fund, or ETF price might increase. When we sell the investment, we will get money.