Grow Rich and Retire Young.

jadani

Hi,
As it is said:"It's not a problem to live poor but to die poor". Many people work hard to get money and few of them are smart enough to have money work for them,any penny is an employer that works for their benefit.

We can be rich within ten years if we get in our mind one rule,it is to know differences between Assets and Liabilities.

In short words: Assets are things bring money to your pocket/wallet,while Liabilities that steal money from you.
Of course there are many examples of Assets and Liabiliries,if you are looking forward to financial freedom you should be aware of Lialibities and try to get Assets.

This is my first post in this awesome forum,I hope i'm useful here.

jadani

Let's give examples of Assets and Liabilities:
what about a house? is it an asset or a liabilities?
house needs electricity,water,renovations and so on.. may be it takes you years to save money or you take a loan from bank,here we have a liability.
If the house give you money by rent,so this house is an Asset.
see you.

jadani

To have more knowledge about money I propose for you a best selling book of Robert Kiyosaki: Rich dad Poor dad.you can find it on web.

tennisace

jadani wrote: »

Let's give examples of Assets and Liabilities:
what about a house? is it an asset or a liabilities?
house needs electricity,water,renovations and so on.. may be it takes you years to save money or you take a loan from bank,here we have a liability.
If the house give you money by rent,so this house is an Asset.
see you.

This is highly debatable.

This concept comes from self-proclaimed financial “guru” Kiyosaki, who asserts that, basically, assets are those that provide cash to you, and liabilities are those that take money away from you.

Kiyosaki is in the business of selling financial self-help materials, and has made his fortune in real estate. Thus, we have to take a look at this from that perspective. This is the basic framework for the ideas he’s trying to sell. I don’t disagree with Kiyosaki’s cash flow concepts, but I think redefining what assets and liabilities are for the purpose of providing meat to the concepts he’s selling is just silly.


Quite simply, assets are something you OWN, while liabilities are something you OWE.

A house is an asset. It has value. It can be converted into cash by selling it in the open market.

If you have a mortgage on the house, then the mortgage is a liability. It’s money you owe. This can be offset by the value of your house. And if your house is worth more than you owe, then you have equity.

By TS definition, is a $2M Picasso painting an asset or liability? What about an investment portfolio? I don’t think that anyone would deny that these are assets, even if one has to spend money to insure and protect the painting, or to have a trading account to maintain the portfolio, just as a homeowner would have to spend money for his house's maintenance and security.

Let’s not confuse personal assets with income-producing assets. Income-producing assets are another story, and I think that’s what the TS is trying to get at.

Rental properties (like apartments) are income-producing assets. However, I can guarantee you that Kiyosaki’s income-producing real estate assets are leveraged. Thus, while these rental properties are assets, the money leveraged to own these assets are liabilities. This is basically the same scenario as the house you own.

Where there are assets, there are liabilities. That’s just basic accounting. The basic rule of financial well-being is to own more than you owe and to keep more than what you spend.

Defining, or in Kiyosaki’s case, redefining what assets and liabilities are doesn’t really help in the acquisition of income-producing assets, however. Kiyosaki’s gospels may contain good financial information, but it only serves to put money in his pocket. Those books are his own income-producing assets, aren’t they?

I think showing us realistic methods on how to acquire income-producing assets would be far more meaningful, relevant and helpful if the goal is to grow rich and retire young.