Asset Tower

What is an asset tower? How to build a complete asset tower

I see that most new investors, when starting to invest, all have the same question: "What should I invest in for high profits? How can I make tens of percent profit every month?" However, the root nature of the problem is not just about having money; rather, we need to build an asset tower starting from ourselves.

So what is an asset tower? Is it really important, and how do you build a complete asset tower?

What is an Asset Tower?

An asset tower is a model for allocating different types of assets into different blocks. Each floor represents a type of asset that plays a different role in life. The bottom floor is larger and more stable than the upper floors, forming a structure similar to the ancient Egyptian pyramids.

5 basic types of assets in an asset tower

We often only focus on income-generating assets and overlook other intangible assets in life. When building a complete asset tower, you should build the following 5 basic types of assets:

Intangible assets

Intangible assets are assets that cannot be seen, but they are extremely important and serve as the foundation for creating other types of assets. Intangible assets can be knowledge, experience, skills, and personal relationships.

Just because they don't exist in physical form doesn't mean you already have these intangible assets in your life. This type of asset needs to be experienced, stumbled upon, trained, and continuously maintained to become a valuable asset.

Protective assets

Protective assets are assets that provide a safety net when you encounter life events such as illness, unemployment... These assets may include savings, gold, real estate, or any asset that can be easily converted into cash for your use in difficult times.

Income-generating assets

Income-generating assets are likely something you've known for a long time. It could be a rental property, a savings account with regular interest, or stocks of companies that pay regular dividends each year. It could also be a business you've created and run profitably.

Growth assets

Growth assets are typically investment activities designed to grow profits. Examples include real estate investment, stock market investment... These investments often come with corresponding financial risks.

Speculative assets

Speculative assets are allocated to investment channels with higher risk such as derivative securities, cryptocurrencies... The commonality of these investment channels is high risk, but in return, you can double, triple, or even tenfold your account very quickly.

The 4 floors of a basic asset tower

To build a complete asset tower, you need to construct specific floors of the tower. Building from the bottom up, each floor will play a different role in life. Here are the roles of the 4 floors in a basic asset tower.

Floor 1: Protection

The protection floor will play the role of ensuring you have food, clothing, shelter, and medical care when you are unemployed. This floor will be your savings in the bank. Depending on your monthly spending needs, you will need to accumulate a specific amount of money.

Typically, people will save from 3 to 6 months of their spending. For example, if you spend 15 million VND/month, you need to have savings of 45 million VND, equivalent to 3 months of your personal spending.

During those 3 months, you can comfortably find another job without pressure. This will prevent you from choosing the wrong profession. After finding a job and spending all the money in this tower, you will have to replenish the amount of money you initially saved.

Although this floor is very basic, most of us overlook building this floor and use our savings directly for investment purposes. Therefore, when the bear market appears, you panic and lose other opportunities in the market.

Floor 2: Planning

This floor will be built for a specific financial plan for your family. For example, plans to buy a house, buy a car, invest in education for children, or build a retirement fund for yourself.

Although this floor does not affect your survival like the first floor, it will help you go further and live more planned.

Floor 3: Priority Goals

This is the asset floor that enjoys life a little. For example, a sum of money for travel or buying a house...

And the goals on this floor must also have their deadlines.

From those goals, you can divide them into smaller ones for easier implementation.

Floor 4: Legacy Assets

Our nature is still Asian, we still have a responsibility to our descendants. On this floor, we will start to establish financial funds as legacy assets for our children. It could be an apartment, or a specific amount of money for our children to start their careers.

Or those with enough financial resources and beyond can establish charitable funds to help other less fortunate circumstances outside of society.

How to build a suitable asset tower

Many people start building an asset tower from their goals and dreams. Whatever your wish, just follow it to make the most detailed plan.

You should start from your own financial capabilities. Starting from your monthly salary, starting from what you already have. Allocate, divide, and plan to implement it. Only in this way can your financial plans be implemented.