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Unlocking Wealth: Exploring Incomes, Assets, Liabilities, and Stocks for Financial Success

We have the privilege of inviting Michael Kim to speak for us during our weekly think tank sessions. Michael graduated from Ivey Business School. Previously, he worked as a Risk Advisory Consultant at Deloitte. He is also a Certified Professional Accountant (CPA) and has his own personal finance coaching practice MICHAELEEKIM. MICHAELEEKIM specializes in educating young professionals on the art of making, saving, and investing their money, enabling them to attain generational wealth and achieve financial freedom. In today's complex financial landscape, understanding the nuances of income sources and wealth generation is of paramount importance. Financial security and wealth creation are not just distant dreams but achievable goals when you have a clear grasp of the three fundamental types of income: employment income, business income, and investment income. These income sources play pivotal roles in building a stable financial foundation and ensuring a prosperous future. In this blog, we will delve into each of these income categories, explore the distinctions between assets and liabilities, and shed light on the wealth-building potential of stocks. We'll also guide you through the process of creating a money plan, a strategic tool that will help you navigate from your current financial status (Point A) to your desired financial goals (Point B), all while maximizing your income potential. Ultimately, by understanding these concepts and implementing them into your financial strategy, you can take significant steps toward securing your financial future and creating wealth.

Types of Incomes

In our quest to unlock the secrets of financial success, we must begin by understanding the core categories of income that shape our economic lives. These three primary types of incomes—employment income, business income, and investment income—each have their unique characteristics and contributions to your financial well-being.

Employment Income

Employment income is the most common and often the most stable form of income for many individuals. It's the paycheck you receive from your job, whether you work for a company or as a self-employed professional. This steady income source forms the foundation of your financial stability, covering your day-to-day expenses, bills, and other essential financial commitments. While it provides regularity and predictability, it might not always offer the same wealth-building potential as the other two income types.

Business Income

Business income represents a dynamic and versatile avenue for wealth creation. It often stems from entrepreneurial endeavors, where individuals start and manage their own businesses. Whether you're a solo entrepreneur or a business owner with employees, the profits generated from your enterprise contribute directly to your total earned income. What sets business income apart is the direct correlation between skill, value creation, and monetary rewards. By honing your skills and learning to market and sell effectively, you can exponentially increase your business income. It's an exciting realm of opportunity for those willing to take the entrepreneurial plunge, and the best time to embark on this journey is now.

Investment Income

Investment income, on the other hand, offers the potential for passive wealth accumulation. It can take the form of capital gains, which are profits realized from the sale of investments such as stocks, real estate, or other assets. What's particularly enticing is that only 50% of capital gains are taxable in many jurisdictions, providing a tax advantage that can significantly boost your returns. Another facet of investment income is dividends, providing a consistent stream of cash distributions to investors who own stocks in dividend-paying companies. By diversifying your investment portfolio and strategically managing your assets, you can harness the power of investment income to build wealth over time.

These three types of incomes, each with its own characteristics and wealth-building potential, form the cornerstones of your financial journey. Understanding their roles in your life and implementing them effectively can set you on a path towards financial security and success.


In the realm of personal finance, distinguishing between assets and liabilities is a fundamental concept that can significantly impact your overall financial well-being. These two terms represent opposing forces in your financial life, and understanding their implications is crucial for making informed decisions about wealth management.


Assets encompass everything you own or possess that holds intrinsic or potential value. These can take various forms, including cash, real estate, investments, personal property (such as cars and electronics), and even intangible assets like intellectual property or goodwill. The key characteristic of assets is that they can generate income or appreciate in value over time. For example, an investment property can generate rental income, a stock portfolio can appreciate in value, and even your education and skills can be considered assets, as they can lead to higher earning potential. Effectively managing and growing your assets can play a pivotal role in building wealth.


On the flip side, liabilities represent everything you owe, encompassing your debts and financial obligations. These can include mortgages, car loans, credit card debt, student loans, and any other financial liabilities you may have incurred. Liabilities typically drain your financial resources in the form of interest payments or regular repayments. It's important to manage your liabilities carefully, as excessive debt can erode your financial stability and limit your ability to accumulate wealth.

The crucial point to understand is that your net worth is the difference between your total assets and liabilities. As you work towards financial success, you should aim to increase your assets and reduce your liabilities to bolster your net worth. This can be achieved by strategic decision-making, such as investing in income-generating assets and actively paying down high-interest debts. Essentially, the goal is to shift the balance in favor of assets, as they have the potential to increase your wealth over time.

By comprehending the concepts of assets and liabilities and actively managing them in your financial life, you can make wiser financial choices and work toward a more secure and prosperous future. This understanding forms a critical foundation for wealth creation and long-term financial success.


Stocks: A Wealth-Building Tool

Stocks, or shares of ownership in publicly-traded companies, represent a versatile and powerful instrument for wealth creation. They offer individuals an opportunity to participate in the growth and prosperity of businesses, and there are two primary ways to make money from stocks: capital gains and dividends. Understanding how to harness the wealth-building potential of stocks is essential for anyone seeking to grow their financial portfolio and secure their financial future.

Overview of Stocks as an Investment

Stocks are a popular investment choice for several compelling reasons. When you invest in stocks, you become a partial owner of the underlying company, which means you share in its success and profitability. This ownership comes with the potential for capital appreciation as the company's value and stock price increase over time. Moreover, stocks provide liquidity, meaning they can typically be bought and sold relatively easily, making them a flexible investment option.

Two Ways to Make Money from Stocks

Capital Gains

One of the most common ways to profit from stocks is through capital gains. This strategy involves buying stocks at a lower price and selling them at a higher price, capturing the difference as profit. The buy-low, sell-high principle underscores this approach, which necessitates astute market timing and a comprehensive understanding of the companies you invest in. Capital gains are a valuable source of wealth accumulation, offering the potential for significant returns over time.

For instance, if you purchase a stock at $50 per share and sell it at $150 per share, you've realized a capital gain of $100 per share. By strategically selecting and managing your stock investments, you can capitalize on the growth potential of various companies and industries.


Dividends represent a recurring income stream for stockholders. These are periodic cash distributions made by companies to their shareholders, usually on a monthly or quarterly basis. Dividend-paying stocks are attractive for investors seeking a steady income source in addition to the potential for capital appreciation.

Owning dividend stocks provides you with a regular stream of cash, allowing you to benefit from your investments even without selling the stocks. This passive income stream can be a valuable addition to your overall financial strategy, especially for those focused on income generation and financial stability.

By incorporating stocks into your investment portfolio, you can diversify your income sources and harness their wealth-building potential. Careful stock selection, informed decision-making, and a long-term perspective can make stocks a significant driver of financial success. Whether you're looking to build wealth, secure your retirement, or achieve specific financial goals, stocks offer a path to investment growth and financial prosperity.


Creating a Money Plan

Creating a money plan is akin to charting a course for your financial journey. It's a strategic tool designed to guide you from your current financial position (Point A) to your envisioned financial goals (Point B), all while making the most of the income sources available to you. This comprehensive plan takes into account not only your employment income but also your business and investment income, creating a holistic approach to managing and growing your wealth.

The Role of a Money Plan in Wealth Creation

A money plan isn't just a budget or a simple savings strategy; it's a dynamic blueprint that empowers you to take control of your financial destiny. It provides clarity and direction, helping you navigate the complexities of personal finance with purpose and intent. A well-crafted money plan enables you to make informed decisions, mitigate risks, and seize opportunities as they arise.

Defining the Key Points in Your Financial Journey

Point A: Evaluating Your Net Worth: Before you embark on any financial journey, it's crucial to have a clear understanding of where you stand financially. This involves assessing your net worth, which is the difference between your total assets and liabilities. Knowing your net worth at the outset provides a benchmark for tracking your progress.

Point B: Setting Financial Goals: Your financial goals are the destinations you aim to reach on your journey. These can encompass a range of objectives, from paying off debts and saving for retirement to buying a home or funding your children's education. Clearly defined goals provide motivation and a sense of purpose.

Point C: Creating a Comprehensive Money Plan: This is the heart of your financial strategy, where you outline the steps necessary to bridge the gap between your current net worth (Point A) and your financial goals (Point B). Your money plan should encompass various aspects, including:

  • Budgeting: Allocating your income to meet your expenses, save, and invest effectively.

  • Investment Strategy: Determining how to make the most of your business and investment income by selecting the right investments.

  • Debt Management: Developing a plan to pay down high-interest debts, such as credit cards or student loans.

  • Emergency Fund: Establishing a financial safety net for unexpected expenses.

  • Retirement Planning: Saving for your retirement through retirement accounts or other investment vehicles.

  • Tax Planning: Maximizing your income by minimizing your tax liability through tax-efficient strategies.

A well-crafted money plan is a dynamic document that evolves with your financial situation and goals. It empowers you to make sound financial decisions, prioritize your objectives, and adapt to changing circumstances.


In Conclusion...

In the complex world of personal finance, the ability to unlock and harness the wealth-building potential of various income sources, assets, and investments is paramount. By comprehending the three fundamental types of income, differentiating between assets and liabilities, and understanding the wealth-building power of stocks, you can take significant strides toward securing your financial future. Furthermore, creating a comprehensive money plan that guides you from your current financial standing to your envisioned financial goals is a crucial step on your journey to prosperity. In essence, by embracing these concepts and integrating them into your financial strategy, you can empower yourself to make informed decisions, maximize your income, and forge a path toward financial security and wealth. The key to financial success lies in your hands, and with the right knowledge and planning, you can unlock the doors to financial prosperity and the achievement of your dreams.

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