Why Income Alone Won't Make You Rich, But Your Business Can
When you start a business, you are likely thinking of one goal, and that's to create an income. But income alone does not create wealth. You can create true wealth when you stop looking at your business as a job that brings you income and start looking at it as an asset that grows in value, generates long-term returns, and can create generational wealth for you.
When you view your business as an asset, your mindset shifts. You start to think of ways your business can build wealth for you that goes beyond working to get paid. You are building an asset that provides equity, scalability, and value beyond your day-to-day involvement. The mindset shift changes how you make business decisions, from pricing and profitability to branding and leadership. And it's the key to moving from self-employed to being a business owner that builds wealth, not just income.
Why Building Wealth Through a Business is Powerful
Business ownership gives you leverage that a 9-to-5 job never can. As an employee your income is capped by a salary or hourly rate. As a business owner, there's no ceiling. That means that all your efforts, creativity, and strategy directly impact how much you can earn. You control your pricing, your growth strategy, and the opportunities that you create.
Profits from your business can be reinvested into the business to grow the value of the business. Every dollar you put back into your business, whether through marketing, hiring, or improving operations, has the potential to multiply your returns. This business growth builds equity, and equity is where the wealth is.
Because your business is an asset, one of the most powerful moves you can make to build wealth is to sell or exit your business. This can create a life-changing financial event. When you add in the tax benefits that come with business ownership like deductions and income-splitting strategies, it's clear why entrepreneurship is one of the most effective paths to building long-term wealth.
Common Mistakes that Keep a Business from Becoming an Asset
If you want to build wealth from your business, it's essential that you avoid these common mistakes:
It's tempting to spend the cash in your business but those are profits that can be reinvested back into your business for growth. By spending profits you are holding back business growth and reducing future value.
Building a true asset that can provide you a saleable business requires that you build your business so that it can run without you. This will increase the value of your business exponentially.
Without a clear growth plan, solid financial management, and exit strategy, your business remains just a job rather than a wealth-building asset.
The bottom line is that building wealth through your business isn't about working harder. You can create an asset that provides lasting value. When you treat your business as an asset, every decision you make will focus on profitability and add to equity. With the right strategy and mindset, your business can become not just a source of income, but a powerful wealth-building tool.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
12 minutes ago
- Yahoo
Meet the Unstoppable Stock That Could Join Nvidia, Microsoft, and Apple in the $3 Trillion Club
Key Points Nine American companies are currently worth $1 trillion or more, but just three have graduated into the $3 trillion club. Alphabet owns businesses like Google Search and Google Cloud, where revenue growth is currently accelerating thanks to artificial intelligence (AI). Alphabet stock is trading at a very attractive valuation, which sets the stage for a potential move into the $3 trillion club. 10 stocks we like better than Alphabet › The U.S. is home to nine companies with market capitalizations of $1 trillion or more, but only three have surpassed the ultra-exclusive $3 trillion milestone: Nvidia: $4.2 trillion Microsoft: $3.8 trillion Apple: $3.2 trillion I think another might be set to join them. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the parent company of Google, and it's fast becoming a leader in the artificial intelligence (AI) race. The company had a market capitalization of $2.3 trillion as of market close on July 25, but its recent financial results and the valuation of its stock might support a move into the $3 trillion club in the near future. If Alphabet does cross the exclusive milestone, investors who buy its stock today could earn a return of over 30%. AI is reshaping Google Search Google Search is Alphabet's most important business, because it consistently represents more than half of the tech conglomerate's total revenue. A few years ago, investors were worried AI chatbots like OpenAI's ChatGPT would filter traffic away from Google Search, hampering its ability to generate revenue through advertising. But it seems those concerns were overblown. Google Search generated a record $54.2 billion in revenue during the second quarter of 2025 (ended June 30), which was up 11.7% compared to the year-ago period. That marked an acceleration from its first-quarter growth of 9.8%, which suggests the search business is gathering momentum. AI is a big reason why. Alphabet developed its own family of large language models (LLMs) called Gemini, and it used them to create a new Google Search feature called AI Overviews. They use text, images, and links to third-party sources to craft complete responses to queries, saving users from having to sift through web pages to find the information they need. This creates a far more convenient experience. Alphabet said 2 billion people were using AI Overviews every month during the second quarter, and since they monetize at the same rate as traditional Google Search results, they aren't cannibalizing the company's core business. Overviews are also driving higher Google Search usage, because they encourage users to refine their queries to generate the most accurate outputs. Alphabet also launched a stand-alone AI chatbot called Gemini to capture traffic from users who prefer to seek information that way. Moreover, the company just rolled out "AI Mode" for Google Search, which introduces a chatbot-style interface to the traditional search experience. Alphabet hopes these tools will keep users within Google's ecosystem, and stop them from experimenting with the competition. Google Cloud revenue growth is also accelerating Google Cloud is consistently Alphabet's fastest-growing business, and the second quarter was no exception. The segment generated a record $13.6 billion in revenue, which was up by a whopping 32% year over year. That marked an acceleration from the first quarter, when revenue grew by 28%. AI is driving that momentum. Google Cloud operates industry-leading data centers fitted with powerful AI graphics processors (GPUs) from Nvidia, and also tensor processors (TPUs), which it designed in-house. This optionality makes the Google Cloud platform attractive to AI developers of all sizes, which is why nearly all AI unicorns (AI start-ups worth $1 billion or more) are using it. Google Cloud also offers access to hundreds of ready-made LLMs, including Gemini, which developers can use to create AI software much faster than if they had to train their own models from scratch. Alphabet said more than 85,000 enterprises are now building AI applications with Gemini models, resulting in a staggering year-over-year increase in usage of 35 times during the second quarter. Alphabet CFO Anat Ashkenazi said Google Cloud's order backlog soared 38% year over year to a whopping $106 billion, which means demand for computing capacity continues to outstrip supply. To convert that backlog into revenue, the company needs to build more data centers, which is why it just increased its capital expenditures (capex) forecast for 2025 to $85 billion, from $75 billion previously. Alphabet's (mathematical) path to the $3 trillion club Alphabet's earnings per share (EPS) climbed by 22% year over year in the second quarter to come in at $2.31. The company's trailing-12-month EPS now stands at $9.39, which places its stock at a price-to-earnings (P/E) ratio of 20.6. That's a steep discount to the Nasdaq-100 technology index, which hosts all of Alphabet's big-tech peers, and trades at a P/E ratio of 32.5. It also makes Alphabet the cheapest stock in the "Magnificent Seven," a group of tech giants leading the way in different segments of the AI race. Alphabet stock would have to soar by 83% just to trade in line with the median P/E ratio of the Magnificent Seven stocks (37.8), which would catapult its market cap to $4.2 trillion. Even if its stock climbed by 58% so its P/E matched that of the Nasdaq-100, it would still be enough to push the company's valuation way above $3 trillion. One thing suppressing Alphabet's P/E ratio right now is the ongoing legal battle with the U.S. Department of Justice (DOJ). The agency won a lawsuit last year that determined Alphabet used monopolistic practices to protect its market share in the internet search industry. For example, the company was paying Apple handsome annual fees to make Google the default search engine on devices like the iPhone, making it nearly impossible for competitors to make inroads. A judge is expected to hand down Alphabet's punishment in August. It could be a simple financial penalty, or the company might be forced to sell parts of its business to level the competitive playing field. Any remedy that diminishes the dominance of Google Search could harm Alphabet's earnings potential, which is why investors are tentative. However, there is likely to be a lengthy appeals process, which could tie the matter up in court for several more years. In the here-and-now, I think Alphabet stock is a bargain based on its incredible progress in the AI space alone, especially as it relates to Google Cloud, which isn't facing regulatory scrutiny right now. As a result, I think Alphabet has a pathway to the $3 trillion club in the next year or so, irrespective of the legal overhang. Should you buy stock in Alphabet right now? Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $630,291!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,075,791!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Meet the Unstoppable Stock That Could Join Nvidia, Microsoft, and Apple in the $3 Trillion Club was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12 minutes ago
- Yahoo
Trending tickers: latest investor updates on Microsoft, Meta, Nvidia, Amazon and Rolls-Royce
Microsoft (MSFT) Shares in Microsoft jumped by almost 10% in pre-market trading after the company announced a surge in quarterly profits thanks to record revenues from its cloud computing division. Net income increased 24% year on year to $27.2bn (£20.51bn), surpassing analysts' expectations for $25.3bn in the fourth quarter of Microsoft's fiscal year, ending June 30. Revenue increased 18% to $76.4bn in the fiscal fourth quarter ending June 30, up from $64.7bn a year earlier. That's the fastest growth in more than three years. The company's Intelligent Cloud unit, which includes the Azure cloud, produced $29.88bn in revenue in the final quarter. For the entire fiscal year, this AI division saw revenue surge 34% to a record $75bn. The company predicted its capital expenditure for the next fiscal year would top $100bn, a 14% increase from the year prior. It's the fifth quarter in a row that Microsoft has beaten Wall Street's expectations. Read more: Shell announces further $3.5bn in share buybacks as profits beat estimates 'Cloud and AI is the driving force of business transformation across every industry and sector,' said Satya Nadella, chairman and chief executive officer of Microsoft. 'We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75bn in revenue, up 34%, driven by growth across all workloads,' Nadella said in a statement. Shares in the company are trading a near record of $513, up 22% since the start of the year. Meta (META) Meta shares were up by 12% ahead of the US opening bell after posting a bumper set of financial results that eased concerns it was lagging rivals in the AI race. The firm, which owns Facebook, Instagram and WhatsApp, said revenue for the three months to the end of June rose 22% from the same period last year to $47.5bn. Meanwhile, profits jumped by 36% to $18.3bn. Profit per share came in at $7.14, above analysts' estimates. Meta said it expected its total expenses for 2025 to come in the range of $114bn and $118bn. The company added its AI initiatives will 'result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth.' "I think there are all these questions that people have about what are going to be the timelines to get to really strong AI or superintelligence ... we've observed the more aggressive assumptions, or the fastest assumptions, have been the ones that have most accurately predicted what would happen. I think that that just continued to happen over the course of this year too," CEO Mark Zuckerberg said on a conference call with analysts. Reality Labs logged an operating loss of $4.53bn while recording $370m in sales during the same period. This division oversees the Quest line of virtual reality headsets in addition to the Ray-Ban Meta smart glasses. Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Meta has knocked it out of the park. Pick your metric and Meta crushed it, from ad revenue growth to daily users, all the way down to the profit lines. "AI is clearly delivering real-world benefits for advertisers, and they're willing to pay more as a result. Average price per ad was up 9% over the quarter, a clear indication that Meta is delivering an improved product for both users and advertisers. "The broader focus now turns to Meta's mammoth AI investment plans and whether it can continue to manage those costs without hurting earnings or free cash flow. "CFO commentary called out higher costs next year, and another year of similar capex growth, which many analysts did not have on their bingo cards. Clearly, all this spending adds some near-term risks to the bottom line, but Meta looks set to be a clear winner in the AI space over the longer term." Nvidia (NVDA) Shares in the AI darling were trending in pre-market trading as Morgan Stanley raised its price target to $200 from $170 while maintaining an Overweight rating on the stock. "We think that the increase in enthusiasm for AI semis is justified by long-term strength in the business," Morgan Stanley analyst Joseph Moore said in a client note. "AI strength is exceptional in both supply and demand," Moore said. "All of our data points and contacts are telling us that customers need more compute, and we are seeing a clear acceleration in inference workloads driving that." Moore added that he was not concerned about the higher valuations for AI chipmakers. "While stock prices have moved higher, our conviction on AI spend durability in 2026 continues to grow," he said. "It is our view that at least three of the four top cloud customers have asked for upside, and we have seen even more notable strength from neoclouds and consumer internet companies." Read more: Mercedes-Benz, Porsche and Aston Martin among latest carmakers hit by Trump's tariffs Meanwhile, China raised concerns over potential security risks in Nvidia's H20 artificial intelligence chip, in a blow to the US company's push to revive sales in the country after Washington granted approval for the export of a made-for-China chip. The Cyberspace Administration of China, the country's internet regulator, said it was concerned by a US proposal for advanced chips sold abroad to be equipped with tracking and positioning functions. Amazon (AMZN) Shares in Amazon are 3% higher in pre-market trading, as the e-commerce giant prepares to announce second quarter results later in the day. "Investor sentiment is broadly positive, with expectations improving in recent weeks following a disappointing 2Q guide that was delivered in early May," Wedbush analyst Scott Devitt wrote to clients Wednesday. "Still, profitability forecasts for the year remain depressed as investors weigh the impact of tariff/macro uncertainty, currency risk, rising expenses to support AI initiatives, and an uncertain cost trajectory associated with Project Kuiper." According to analysts, Amazon's total revenue is expected to grow 9.5% year-on-year to $162.2bn. This falls at the mid-range point of Amazon's own guidance of $159bn-$164bn. Operating income is forecast at $16.7bn, a 13.8% jump from the same period last year, according to IG analysts. All 26 analysts tracked by Visible Alpha give Amazon's stock a "buy" or equivalent rating. Their average price target near $250 would surpass Amazon's previous record close of $242.06 on 4 February. Amazon is scheduled to report second-quarter earnings after the market closes on Thursday, with analysts focusing on the artificial intelligence powered growth of the Amazon Web Services cloud. However, questions about the effects of tariffs on Amazon's retail operations are likely to arise. Rolls-Royce (RR.L) Rolls-Royce's share price has soared by 10.9% in early trading this morning in London, to a new record high, after reporting a 50% increase in underlying operating profit in the first half. Underlying operating profit for the engine maker jumped to £1.73bn in the first six months of 2025 from £1.15bn a year earlier. Pre-tax profit rose to £1.7bn, up from £1bn. Underlying revenues in the first six months were just over £9bn, compared with £8.1bn in the same period in 2024. The company also raised its free cash flow guidance to £3bn-£3.1bn, compared with a previous range of £2.7bn-£2.9bn. The jet engine manufacturer was valued at £83bn yesterday evening, so another 10% gain puts its valuation at more than £92bn, a new record high. Its market value has almost doubled over the course of 2025 and the stock is up 400% in the last two years. Tufan Erginbilgiç, Rolls-Royce's chief executive, said the company's transformation was continuing to deliver. 'Our actions led to strong first half-year results, despite the challenges of the supply chain and tariffs,' he said. Since taking over in 2023, Erginbilgic has cut costs and pushed customers to pay more for its products through renegotiating contracts for maintaining jet engines that go on widebody planes such as the Airbus A350 and Boeing's 787. Read more: Should you invest in gold? Lale Akoner, global market analyst at eToro, said: 'Rolls-Royce's latest results show a business that keeps on delivering. First-half profit rose 51% to £1.73bn, and free cash flow reached £1.6bn. That's ahead of expectations and led the company to raise full-year forecasts for both profit and cash generation. 'Civil Aerospace is driving the numbers, with margin hitting 25%, a level that would've seemed unrealistic two years ago. It's not just more planes flying, it's better contracts, higher prices, and fewer loss-making deals. But what matters more for the long-term story is what's happening outside aviation. 'Power Systems, which supplies engines to data centres, saw nearly 90% profit growth. That's a clear play on AI and cloud infrastructure. With the addition of steady defence contracts and its leading role in the UK's nuclear SMR programme, Rolls-Royce is building exposure to real-world trends with long-term funding behind them. For retail investors, the story has shifted and Rolls-Royce is no longer a recovery trade. It is generating cash, expanding margins, and exposed to structurally growing markets. It's starting to operate like the business investors always hoped it would be.'Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12 minutes ago
- Yahoo
DICK'S Sporting Goods, Inc. (DKS) Bought Foot Locker Due To Nike, Says Jim Cramer
We recently published . DICK'S Sporting Goods, Inc. (NYSE:DKS) is one of the stocks Jim Cramer recently discussed. DICK'S Sporting Goods, Inc. (NYSE:DKS) is a well-known American sporting goods retailer. The shares have lost 5% year-to-date as the retail sector has struggled, but would have been down more had it not been for a 20% gain since the firm announced that it would acquire Foot Locker in late June. Cramer's previous remarks about DICK'S Sporting Goods, Inc. (NYSE:DKS) have hypothesized that it 'might' be worth buying the stock after its gains following the Foot Locker announcement. This time, he maintained that the shoe retailer's access to Nike was a key driving factor behind the deal: '. . .I think that the Footlocker buy by Dick's is an acknowledgement that Footlocker's getting the right Nikes.' Here are Cramer's previous thoughts about DICK'S Sporting Goods, Inc. (NYSE:DKS): 'The retail rally's a little more difficult. You might want to shoot the moon and buy DICK's Sporting Goods, betting that Nike could, that Nike turn could benefit them now that they're acquiring Foot Locker, but the stock just ran up 30 points on that news.' While we acknowledge the potential of DKS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
