In a previous post, we explored Robert Kiyosaki’s Cashflow Quadrant and emphasized that every person should learn how to become an Investor. Why? Because being an investor means using money to make more money — and the key to doing that is by building an asset base.

🏗️ What Is an Asset?

An asset is something of value that you own, which is expected to bring future economic benefits — in simple terms, it puts money in your pocket.

Examples of assets:

• 💰 Savings in your bank account
• 📜 Lending money to the government or a company
• 🏠 Rental flats or student digs
• 📈 Shares in a company
• 🪙 Gold or silver
• 🎨 Crypto, art, vintage sneakers

💸 What Is a Liability?

A liability is the opposite of an asset — it’s something you owe that takes money out of your pocket.

Examples of liabilities:

• 🎓 Student loans
• 🚗 Car loans
• 🏡 Mortgage bonds
• 💳 Credit card debt

📊 Understanding Your Balance Sheet

Your balance sheet (also called a Statement of Assets and Liabilities) is a snapshot of your financial position.

• On one side: your assets
• On the other: your liabilities

Your net worth is calculated as:

🧮 Net Worth = Assets – Liabilities

As an investor, your goal is to grow your assets faster than your liabilities — so your net worth increases over time.

📈 Solvency Ratio: A Quick Health Check

To measure how much of your assets are funded by your own money (not debt), use the solvency ratio:

Solvency Ratio = (Net Worth / Total Assets) × 100

The higher the ratio, the more financially stable you are.

🧩 Types of Assets on Your Balance Sheet

• Liquid Assets: Easily accessible cash (e.g. savings, emergency fund)
• Investment Assets: Designed to earn returns (e.g. retirement annuity, share portfolio)
• Lifestyle Assets: Used for personal living (e.g. your laptop, your car, your home)
• Business Assets: Used to generate income (e.g. camera for content creation, stock for a side hustle)

📉 Types of Liabilities

• Short-Term Liabilities (due within a year):
  • Credit card debt
  • Overdraft
  • Short-term loans
  • Outstanding bills
• Long-Term Liabilities (due over multiple years):
  • Student loans
  • Mortgage bond
  • Car finance

🔍 Should You Pay Off Debt or Invest?

Here’s a simple rule of thumb:

• Calculate your after-tax return on an investment
• Compare it to the interest rate on your debt

If your after-tax return is less than your debt interest → Pay off the debt If your return is greater → Invest instead

🧭 Final Thoughts: Start Where You Are

You don’t need a trust fund or a finance degree to begin. Start by:

• Tracking your net worth. You can download my balance sheet template below.
• Building your emergency fund
• Asking: Will this put money in my pocket — or take it out?

Whether you’re saving your first R500 or flipping thrift finds for profit, you’re already thinking like an investor. And that’s the mindset that builds wealth — one smart decision at a time.