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Glossary

Equity

Ownership of an asset, as opposed to income from working on it.

Equity is the difference between being paid to build something and owning the thing you built. A developer earning $200,000 has a good income; a developer owning 5% of a company worth $40m has the same amount in a completely different form - one that can grow while they sleep and be sold in one transaction.

Nearly everyone who becomes wealthy quickly does it through equity rather than salary. The trade-off is that equity is illiquid, often worthless, and pays nothing until an event that may never come.

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