Capital (money) has two functions:
1 Consumption (rigid demand) 2 Value-added (compound interest)
What is an asset? What is a liability? In fact, there is no clear definition between the two!
80% of people in our world work, save, and then pool their money to buy a house or a car, and then pay in installments. This house and car have usage costs every month, so the assets in our eyes are actually liabilities. Even if you buy it in full, you will still have negative equity.
There are also 20% of people who are good at karate and borrow money from banks or other people. Even if the interest rate is relatively high, they can earn profits that far exceed the interest rate. Then they have turned their liabilities into positive assets. The more liabilities you have, the more positive assets you have, the more wealth you have!
So most people in this world save money, and a few people borrow money. Those who save money become increasingly devalued, while those who borrow money become richer and richer.
Measuring a person's wealth value is actually roughly how much it is worth in banks and capital markets. For example, a big real estate owner is worth 2 trillion.
So how to build your own credit and make it more valuable in banks and capital markets?
