Carol Channing sang it on Broadway. Marilyn Monroe sang it in the movies. They are the words so many of us have quoted . . . and smiled about: "Diamonds are a girl's best friend."

Well, times have changed. I suggest a new mantra: Assets are a girl's best friend.

I'm here to tell you that if you want to be financially secure in the shaky economic years ahead (no, I do not believe the recovery has begun), then what will put the twinkle in your eye is not the glimmer of expensive jewelry, but rather the cash flowing into your pocket from your newly acquired asset.

As defined by the Rich Woman philosophy, an asset is something that puts money in your pocket whether you work or not. The key is whether you work or not. The entire Rich Woman strategy can be summed up in one statement:

The Rich Woman formula is to acquire assets that give you cash flow.

That's it in all its glory. And let's be realistic: Although it's a very simple formula, the execution of this formula is not necessarily easy. But if freedom and peace of mind are important to you, then it's well worth it.

I find it interesting that in traditional accounting terms CPAs would actually count your diamond ring as an asset. In the Rich Woman world, your diamond ring only becomes an asset when you sell it--when it puts money in your pocket.

Many people considered their 401(k) an asset. When the stock market was climbing to new heights, it may have appeared to be just that. However, if you didn't cash in your 401(k) and make a profit (which would deem it an asset), and you're still hanging on to that 401(k), then the odds are that you've lost from 20 percent to 50 percent of the value of that vehicle.

There are four main asset classes:

• Business
• Real estate
• Paper (stocks, bonds, mutual funds)
• Commodities (gold, silver, oil, gas, etc.)

Not all assets provide cash flow. Assets typically generate either cash flow or capital gains. Of course you can have positive or negative cash flow, and you can have capital gains or capital losses. Each asset class has its own strengths and weaknesses. Let's look at each one.

Business. You can start your own business or invest in someone else's business. Businesses depend upon other people and good systems. The rule in business is that you need three key components to succeed:

1. Good partners
2. Good financing
3. Good management

The weakness of business as an asset class is that it is probably the toughest to succeed in and the toughest to sustain.

Real estate. I'm talking about real estate that delivers cash flow on a monthly, quarterly or annual basis--rental real estate. Remember, the Rich Woman formula is to acquire assets that generate cash flow. That is why flipping property, although it may have its place in your investment plan, is not the focus for achieving financial security and financial independence.

The benefit of rental real estate, be it apartments, single-family homes, office, retail or industrial property, is that it allows you to use leverage--in other words, borrowed money. It allows you to use good debt vs. bad debt. Good debt is used to increase your return on investment. For example, let's say you have $100,000 and you want to purchase a $100,000 duplex. Instead of having to pay $100,000 out of your pocket, you pay $25,000 and borrow the $75,000. You can now purchase four of these duplexes, assuming they are giving you a positive cash flow, instead of only one. That's the magic of leverage.

Bad debt, which is all most people know, is debt that keeps you poor. Clothes, household items, jewelry and vacations, all purchased via credit cards, are examples of bad debt. Car loans, school loans, the mortgage of your personal residence all qualify as bad debt. In summary, good debt makes you wealthy and bad debt keeps you poor.

Paper. The primary benefit of paper assets is that they are easy to get into and easy to get out of. Paper assets are generally liquid. To buy shares of stock takes no more than a phone call to your broker or a few keystrokes on your computer. If you need to sell your shares for cash, that also is a simple process. Real estate and business do not have the liquidity of most paper assets. The downside to paper assets is that you have no control over the asset. You do not control the income, the expenses or the debt of the company whose stock you own--unless it's your own company.

Commodities. Commodities include gold, silver, oil, gas, coffee and even soybeans, to name just a few. Commodities are typically a capital gains (or loss) play. Each commodity has its own benefit. Gold and silver, for example, are a hedge or insurance against the dollar declining in value and inflation. Generally speaking, when the dollar goes down in value, as it has over the past years, the price of gold and silver go up.

Why Assets?
I would rather buy assets than save money today. Why? With your money earning from 0.5 percent to 1.8 percent in a savings account, you are actually losing money when you take into account bank fees, inflation and the devaluation of the dollar. I would rather spend my money on things that will:

• Make me money, such as a stock that pays a dividend, a rental property that delivers a positive cash flow or a gumball machine that I collect the coins from each week.
   
• Make me feel confident that it will appreciate in value given the current state of affairs, such as gold and silver.

I started with one asset: a two-bedroom, one-bath rental house. I kept acquiring more assets over the years. Today I own about 1,400 rental units, plus other assets. Each year my husband, Robert, and I set our "asset goal"--how many assets we plan to acquire for the year. I am currently pursuing a couple of properties that will meet the goal I set for 2009. Instead of losing money by letting it sit in the bank, I'm putting it into a property that will give me a healthy monthly cash flow and, if we do our job well, will also greatly increase in value.

Along with generating cash flow, there is a second benefit to acquiring assets: I still own the asset. The asset is not consumed as are so many things we buy, such as a nice wine or a tropical vacation. Can an asset go down in value? Of course, and that is why your financial intelligence has to keep growing as the markets change. We always have to keep getting smarter with our money.

So for me, assets--not diamonds--are a girl's best friend. In times like these, we need all the friends we can get.