Many equate wealth with a bulging bank account, a life filled with luxuries, and the ability to buy whatever they desire.

But what if you are trading your time for money?

Or worse, your health?

What if the generation of income stops the moment you stop moving?
Are you really wealthy if that is the case?

Naval Ravikant, famous startup founder and investor argues, true wealth isn't measured in dollars but in freedom.

It's about having the financial flexibility to pursue your passions, live life on your own terms, and escape the shackles of constant work.

True wealth is the ability to do what you want, when you want, with whom you want.

So, how do we achieve this freedom?

First, we need to understand more about what are true assets look like.

About Assets and Liabilities

"Wealth is assets that earn while you sleep."

Assets, like investments (stocks, bonds, real estate) and businesses that generate passive income, put money in your pocket over time.

"Liabilities are things that take money out of your pocket."

These include debt (mortgages, car loans) and depreciating assets (cars) that drain your resources.

The key to unlocking freedom lies in building a strong foundation of income-generating assets.

Ravikant warns: "You're never going to get rich renting out your time."

Owning a part of a business is essential to truly be wealthy

Ravikant emphasizes that owning a piece of a business is essential to truly be wealthy.

He explains, "If you don't own a part of a business, you don't have a path towards financial freedom. Build or buy equity in a business."

• Benefit from the potential for significant growth

  Unlike steady returns from traditional investments, businesses have the potential for exponential growth, multiplying your investment value and generating substantial upside.

• Gain exposure to multiple income streams

  Businesses often have various revenue sources, mitigating risk and offering greater financial stability compared to relying on a single income source. This also diversifies risk.

• High potential ratio of upside to downside

  A wise investment can lead to disproportionate upside something that cannot be achieved from trading time, which is almost always a linear exchange!

A good business is one that scales without needing a proportional increase in time or people, or both. In other words, when the flywheel starts going, the rate at which your revenue grows is disproportionate higher to the time, resources or people it requires to generate this growth.

True Wealth allows you to:

• Pursue your passions

  Whether it's traveling the world, starting a creative project, or volunteering, financial freedom opens doors to explore your true interests.

• Work on your own terms

  You can choose to work part-time, take extended breaks, or even retire early without worrying about financial constraints.

• Reduce your stress and anxiety

  Knowing you have a reliable income from multiple sources brings peace of mind and allows you to focus on what truly matters, and gives you real freedom.

Building your asset base is a gradual process

The initial turning of the flywheel is the hardest part. Ravikant recommends the following steps to help with this initial barrier:

• Live below your means

  Avoid lifestyle inflation and prioritize saving a portion of your income to invest in assets."

• Educate yourself

  Learn about different investment options and choose those that align with your risk tolerance and goals.

• Start small and be patient

  Building wealth takes time. Start investing early, even with small amounts, and be patient as your assets grow over time.

The exponential effect of asset growth is the most counterintuitive effect. For example, Warren Buffet made over 90% of his wealth AFTER the age of 60! He started investing in his teens.