Still an asset. Hell a car is still an asset, it’s just a depreciating asset. I think that saying your referring too originated from robert kiyosaki. He claims anything that doesn’t cash flow is not an asset. An absurd redefinition of what an asset is. Anyways if you include imputed rent most houses yield the same return as the stock market with far less std.
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yea, I probably got this quote from him, and it makes sense. I would consider a car as a liability since you have to pay car insurance, gas and maintenance costs. Worse of all, its price is inversely proportional to the amount of mileage in it. Anything with negative cash flow is a liability, not an asset.
edit:
That’s a good question. If one decides to include their house in net worth calculation, I believe that they should take into consideration the (usually negative) cash flows associated with owning the house.
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I don’t consider a house a part of a person’s net worth. Everyone has to live somewhere and that costs money. If you assume that you’ll always live in a house you own, that money will be tied to that asset forever so might as well exclude it from your net worth imo.
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In Greenman world:
A personal residence = an asset for personal financial statements and estate tax calculations, but not for financial planning or “net worth” calculations. (Unless it’s a mansion and the owner legitmately plans to sell and downsize and bank the equity–which never happens.)
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these are some ridic definitions. Assets minus liabilities. that is the only truth i know.
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Nerdy wants the house equity to be included because if it is excluded, he would be considered a poor and banished from the WSB reddit, where we have established elsewhere that the average user ranks somewhere between the typical U.S. poor and the suspenders-wearing, slicked-back-hair finance industry fat cats that use a $100 bill set on fire to light their Davidoff 702 Series cigars.
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net home equity right now is prolly between 80k to 100k. less than 20% of nw. majority of my nw is in stonks.
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I was kidding. Of course it should be included…
Net worth = Assets - Liabilities
Houses and cars are assets as they can be sold for cash and belong on the Balance Sheet.
The cash flows and returns associated with assets belong in the Income Statement and Cash Flow Statement.
Come on people… this is accounting 101.
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Apparently AF memes fall on deaf ears now…
Link plz. Tank!
That’s all assuming you can sell your home, which you can’t.
Why, because you live in it? Stop paying the bank and then tell them that.
You can always take your equity and downsize to the alley behind the dive bar.
Plus you can take the existing equity from your home and use it to invest in the stock market through a HELOC etc. Or to buy investment real estate, taking money out from your primary residence to use for the down payment etc. There is a significant net worth upside difference between renting a house for a few grand a month, basically the same as a hefty recurring bar or uber tab, and owning one with same level of mortgage and related payments. Anyone who rents, your landlord already understands this well and you are paying rent to create wealth and capital appreciation for him or her or them. Cheers my 2c.
Real estate: You can make big money if you know how!!!
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Home is where the heart is. Would you sell your heart?
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No. I’ve worked hard to make my heart strong and (hopefully) last a long time.
My house, on the other hand, is totally replaceable. We bought this particular one because it has space for kids and is in a good school system. Those traits are easily replicated.
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Exactly, you can’t sell your heart so you can’t sell your home. Your house is your home, so you can’t sell your house. Try as you might, you will never be able.
It seems like the answers to this question can fluctuate based on the age and home ownership status of the folks here. But one easy way to think about it, if for instance some younger folks inherit a deceased family member’s home, with no or only a partial mortgage, can you then monetize it? Of course. And in fact this is a common occurrence. If you’re buying a house and have a small equity stake because you’re early into the mortgage, it’s an asset you are slowly paying off. But it will appreciate in value, you can rent part of it out to a roommate so you get that equity back for cheap or perhaps free, and at some point it becomes something you can either sell to buy more homes or something you can borrow large additional sums against at very low rates to develop businesses, put a few hundred grand or more into an etrade account, etc. Or rent for profit, split into smaller homes then trade those smaller homes up indefinitely, not paying any capital gains because you’re using a 1031 Exchange for example to get a real estate portfolio that diversifies your other holdings, etc. It all depends how far you are into the home ownership and mortgage repayment process, also how the market is doing in your town, etc. The most interesting opportunities with your house happen when you’ve paid it down and the capital appreciation far outgrew the low interest rate you paid annually. People typically buy at least 2-3 primary residences in their life as their financial picture and life needs expand/ change etc. Cheers all the best folks! Have a great weekend, my 2c - sorry for the long post but real estate is my thing haha👍
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