"An asset puts money in your pocket. A liability takes money out of your pocket." Robert Toru Kiyosaki

Why is asset so important? In simplistic terms, assets are things that add to your net worth and include things like properties, business, shares, fixed deposits, equity portfolios, money in the bank, unit trusts, bonds, precious metals, antique collections, art collections. Certain assets can produce regular income streams in the form of interest, rent, dividends, profits, royalties, etc. Other assets can provide capital gains upon disposals.

We live our lives hoping to build up as much assets as we can. Assets give us a sense of security. And society in general measure a person's success by the value of the assets he or she owns.

We need to know four important areas in relation to assets:

(1) Asset accumulation - Before we buy any asset, we need to consider our risk tolerance and our goals. Do we want an asset that can generate a continuous income stream or an asset that will increase significantly in value over time or a combination of both?

(2) Asset protection - This refers to preservation and protection of our assets. We need to seek ways to protect our assets from devaluation or loss.

(3) Asset management - We need to manage our assets so as to ensure that they will increase in value and/or continue to generate a constant income stream. We may need to "cut losses" occasionally.

(4) Asset distribution - We need to put in our will or trust deed or letter of wishes how our assets are to be distributed. If you are to die intestate, this can create problems for your family so making a will is of paramount importance.

All these four areas are inter-related and it is important that we are financially literate so that we can take care of these four areas prudently. We must therefore adopt an attitude of open-mindedness towards financial literacy and strive to equip ourselves with good knowledge in this area.

"The rich know how to convert their earned income, if they have it, into assets that generate passive and portfolio income. So they have money working hard for them instead of them working hard for money." Robert Toru Kiyosaki