Wednesday, June 17, 2009

Home is Asset?

Asset = something that generates positive cash flow for you, something that puts money into your pockets/bank account steadily.

Liability = something that generates negative cash flow for you, that takes money from your pockets and puts it into someone else's pockets.

Rich Dad said, when your banker or real estate broker tells you your home is an asset, they are not lying, they just failed to tell you the whole sentence.

Well, I've come up with some full sentences. Look at the crossed out parts, they are the parts that bankers/brokers usually omit from their sentences when talking to you:

Your home is an asset to us. Your home is your liability and our asset. Your home should your biggest contribution to our investment.

When you buy your home, what happens every month? Does the bank pay you, or do you pay the monthly instalment to the bank? Does the government pay you, or do you pay the taxes to the government every year? If you bought an apartment unit, does the apartment management pay you, or do you pay management fees every month?

So, do you still wanna believe when the banker says your house is your asset?

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