The Most Authentic Guide on Personal Finance and Investments


Words of Wisdom : "Try to be a rainbow in someone's cloud." ~ Maya Angelou

Your Income is NOT your Wealth (Part 1 of 3)

Raw ingredients and cooked dishes are different. Ingredients are not dishes. Similarly, “Income is not wealth”! Just as you use raw food items such as vegetables, rice, wheat, meat, grams, pulses, spices and others as inputs to make various delicious dishes, your income is the input for cooking your delicious millions.

So how are Income and Wealth dissimilar?

a) EARN vs. OWN
Income is ‘in coming’ or ‘in flow’ of money.

The salary that a person earns from his/her job is income. The fee that the lawyers or accountants charge for their professional services is their income. Income is the money received by actors or musicians for their performances. Winning prize money at tournaments becomes a sports person’s income. The price that a painting fetches becomes an artist’s income.

In short, income is the money that you EARN.

Wealth, on the other hand, is ‘accumulation’ of money.

It could be the cash available with you. It could be your bank deposits. It could be your portfolio of stocks; mutual funds; insurance policies. It could be your house; land; commercial property. It could be the gold or silver that you possess.

In other words, wealth is the money that you OWN.

b)  ENERGY vs. ASSETS
You get ‘income money’ by utilizing ENERGY.

If you are a sports person or an artist, it is your talent energy. If you are in a white-collar job or a professional, it is your intellectual energy. If you are a blue-collar employee, it is your physical energy.

You get ‘wealth money’ by utilizing your ASSETS.

If it is a bank deposit, you get interest. If it is property, you get rent. If it is a stock, you get dividend and/or capital appreciation. If it is gold, you get capital appreciation.

(Excerpt from 'Millionaires don't eat cakes...don't make them')

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