[ARCHIVED THREAD] - Asset or Liability (Page 1 of 2)
Posted: 4/10/2013 9:04:50 AM EDT
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Asset: produces a positive cashflow
Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food **Edit after a bit of discussion: Here's the very simple point I was attempting to make (albeit very poorly): I have a very difficult time defining something as an asset that requires income from an unrelated source to pay for owning it. This does severely limit what an asset is in my mind. However, it is the more conservative financial position, but it keeps me out of trouble and helps me focus on finding ways to create wealth that compound and don't require any more of my time/labor. Homes, cars, etc all have value and are assets by the real definition of the word. However, I want to keep the belt tight there and focus my money towards assets that produce a net income. I like to think of an asset as something that produces enough income that it pays for itself and nets a gain without selling it. I build up enough in that arena and limit the assets (by its real definition) that cost me money to own, and I will create long term wealth, regardless of my job status. By the way, I am a mechanical engineer and small business owner for those of you that are asking. My poor attempt at this tread was to hopefully get people to think a bit different about what they consider an investment and an asset when trying to generate ongoing wealth. An asset such as a home does not provide income, but requires income from another source. It can be sold for a profit, and that's great, but I would rather have a passive income from an asset that produces a positive cashflow. An asset - how I defined it for the purpose of my point - was to lead to my definition of investment: owning something that produces a cashflow (stocks with dividends, a business, patents, royalty fees, rental property, etc). Yes, you can lose with those, but if done well, they should produce an income without requiring the owners investment of time. |
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Nope, you are still wrong.
Probably started because of this Also look up Asset/Liability Management and Asset Definition of 'Asset' 1. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. 2. A balance sheet item representing what a firm owns. Liability Definition of 'Liability' A company's legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food Assets do not necessarily produce positive cash flow or any cash flow at all. Assets are tangibles or intangibles that can be exchanged for other assets. A car or house in an asset. Investments are acquisitions that are made with the anticipation of receiving more in the future than the cost of the asset. Gold is an investment. Stocks are an investment. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Asset: has value, can be used to satisfy obligations Liability: a debt or obligation, something you're required to pay Source...I'm a CPA (and clearly OP is not)  But the OP is a 13er. He knows best. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Asset: has value, can be used to satisfy obligations Liability: a debt or obligation, something you're required to pay Source...I'm a CPA (and clearly OP is not) Can I get some Owner's Equity up in here. |
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Quoted: Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food Accounting 101, take it when you get out of HS and start college....... eta***** With no car I'm not going to work thus not making money. With no food I'm not alive thus not making any money. Using your (flawed) logic I just killed your argument. |
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Quoted: Quoted: Quoted: Asset: produces a positive cashflow Liability: produces a negative cashflow. Asset: has value, can be used to satisfy obligations Liability: a debt or obligation, something you're required to pay Source...I'm a CPA (and clearly OP is not) Can I get some Owner's Equity up in here. Don't forget goodwill... |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food Whatever you say bud. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Asset: has value, can be used to satisfy obligations Liability: a debt or obligation, something you're required to pay Source...I'm a CPA (and clearly OP is not) Can I get some Owner's Equity up in here. Don't forget goodwill... Nah GD told me to hell with the FSA in the charity thread 
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food I feel dumber from reading this. 
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haha...I knew this would start a bit of a firestorm.
I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Yeah, not quite. When you're done with junior high, and if you make it through high school, you can enroll in Financial Accounting at the local junior college. This material will be covered in the first week. |
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Quoted: haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. You could have saved some wear on your keyboard and just said "live within your means". |
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. Most of us have come to the realization that very few things in the world operate completely in a vacuum, and that particular articles, in and of themselves, rarely actually generate any positive cash flow, period. |
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. If I redefine a penny as a million dollars then I'm rich as fuck, but that's not how the world works nor will it make me a superstar investor no matter what I choose to invest in. There are pros and cons of every investment, but that's why you do your own research or pay someone you trust for their advice. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food Your user name doesn't support your post. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food Someone must have just got done with a 100 or 200 level econ or accounting class and is flexing their business knowledge. 
Of course its a 13er 
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” Murray Rothbard
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. You could have saved some wear on your keyboard and just said "live within your means". Right, I could have. I have noticed that no one has responded to the investment vs. speculation definitions though. The definitions that I offered there are linked to the way that assets and liabilities are defined in the OP. Also, I'm not sure how someone could say that something that is costing them money to own and is not producing money is not a liability. |
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An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Stop with the dumbfuckery. If I own a cab service, my primary income-generating assets are automobiles since they are necessary to provide my primary service of driving people around. Similarly, my personal vehicle is an asset that allows me to commute 5, 10, or 100 miles each day to earn a living (that is, generate income). The economic benefits of my job exceed the cost of ownership of a vehicle. The vehicle helps me make money, despite the fact I incur expenses to own/operate it. It is an asset. Depreciation on said vehicle is an expense while the accumulated depreciation is not an expense or a liability, it is a contra-asset. |
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An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Stop with the dumbfuckery. If I own a cab service, my primary income-generating assets are automobiles since they are necessary to provide my primary service of driving people around. Similarly, my personal vehicle is an asset that allows me to commute 5, 10, or 100 miles each day to earn a living (that is, generate income). The economic benefits of my job exceed the cost of ownership of a vehicle. The vehicle helps me make money, despite the fact I incur expenses to own/operate it. It is an asset. Depreciation on said vehicle is an expense while the accumulated depreciation is not an expense or a liability, it is a contra-asset. Apparently, the only thing one could count as an actual asset, given the definition provided in the OP, is a printing press or a goose which actually lays golden eggs. |
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. Like I said it's all opportunity cost. Don't buy that reliable car and save money now... lose job six months from now when car breaks down to "save" money. Living within your means is smart. Knowing how to leverage risk makes you smarter. |
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An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Stop with the dumbfuckery. If I own a cab service, my primary income-generating assets are automobiles since they are necessary to provide my primary service of driving people around. Similarly, my personal vehicle is an asset that allows me to commute 5, 10, or 100 miles each day to earn a living (that is, generate income). The economic benefits of my job exceed the cost of ownership of a vehicle. The vehicle helps me make money, despite the fact I incur expenses to own/operate it. It is an asset. Depreciation on said vehicle is an expense while the accumulated depreciation is not an expense or a liability, it is a contra-asset. Apparently, the only thing one could count as an actual asset, given the definition provided in the OP, is a printing press or a goose which actually lays golden eggs. Nope. You have to feed and water the goose so it costs you money. Hurr durr. And the printing press is speculation because you'd just be guessing that the money it prints would be accepted as legal tender. |
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An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Stop with the dumbfuckery. If I own a cab service, my primary income-generating assets are automobiles since they are necessary to provide my primary service of driving people around. Similarly, my personal vehicle is an asset that allows me to commute 5, 10, or 100 miles each day to earn a living (that is, generate income). The economic benefits of my job exceed the cost of ownership of a vehicle. The vehicle helps me make money, despite the fact I incur expenses to own/operate it. It is an asset. Depreciation on said vehicle is an expense while the accumulated depreciation is not an expense or a liability, it is a contra-asset. Apparently, the only thing one could count as an actual asset, given the definition provided in the OP, is a printing press or a goose which actually lays golden eggs. Nope. You have to feed and water the goose so it costs you money. Hurr durr. And the printing press is speculation because you'd just be guessing that the money it prints would be accepted as legal tender. Oooh. True. What about a magic genie lamp? |
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. You could have saved some wear on your keyboard and just said "live within your means". This |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Asset: has value, can be used to satisfy obligations Liability: a debt or obligation, something you're required to pay Source...I'm a CPA (and clearly OP is not) This is the definition I got when I went to business school also . |
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. You could have saved some wear on your keyboard and just said "live within your means". Right, I could have. I have noticed that no one has responded to the investment vs. speculation definitions though. The definitions that I offered there are linked to the way that assets and liabilities are defined in the OP. Also, I'm not sure how someone could say that something that is costing them money to own and is not producing money is not a liability. Ok, let me put my thinking cap on since you started the whole thread with a false premise. Speculation is engaging in a risky financial transaction in the attempt to make a medium or short term gain based on fluctuations in the marketplace. Investment is an attempt to make a profit from underlying financial attributes. There are various types and levels of speculation, hell a hedge is a form of speculation, and not all speculation is bad. Any other brain busters for me. Oh and so you don't think I am pulling this out of my ass OP MA in Accounting, Finance, and economics. Ironically I am pretty positive DK prof was a grad school professor of mine. |
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Many ad hominem and butt hurt responses on here.
Look, the post is to get people to think a little bit. Many people thought their home is an asset, yet it costs them money to own it. Sounds like a liability to me. They also may have thought of their home as an investment, yet it is speculation. It's to get people to think a tad bit different about money and wealth. Net worth when you're talking about "assets" that cost money to own is a pointless measure of wealth. I would argue that wealth is created and sustained when you own assets that kick off a net positive cashflow. Long term wealth without some sort of compounding factor is elusive. "Assets" that are a net negative to own decrease wealth. |
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An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Stop with the dumbfuckery. If I own a cab service, my primary income-generating assets are automobiles since they are necessary to provide my primary service of driving people around. Similarly, my personal vehicle is an asset that allows me to commute 5, 10, or 100 miles each day to earn a living (that is, generate income). The economic benefits of my job exceed the cost of ownership of a vehicle. The vehicle helps me make money, despite the fact I incur expenses to own/operate it. It is an asset. Depreciation on said vehicle is an expense while the accumulated depreciation is not an expense or a liability, it is a contra-asset. Apparently, the only thing one could count as an actual asset, given the definition provided in the OP, is a printing press or a goose which actually lays golden eggs. DK got to that one all ready |
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Nope. You have to feed and water the goose so it costs you money. Hurr durr. And the printing press is speculation because you'd just be guessing that the money it prints would be accepted as legal tender. Oooh. True. What about a magic genie lamp? Terrible. The magic genie lamp would absorb heat from your home, lowering the ambient temperature thus requiring you to pay more to heat your home. It'll also be another thing to polish and dust every week when you clean the house, taking time away from income-generating activities. |
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. You could have saved some wear on your keyboard and just said "live within your means". Right, I could have. I have noticed that no one has responded to the investment vs. speculation definitions though. The definitions that I offered there are linked to the way that assets and liabilities are defined in the OP. Also, I'm not sure how someone could say that something that is costing them money to own and is not producing money is not a liability. Ok, let me put my thinking cap on since you started the whole thread with a false premise. Speculation is engaging in a risky financial transaction in the attempt to make a medium or short term gain based on fluctuations in the marketplace. Investment is an attempt to make a profit from underlying financial attributes. There are various types and levels of speculation, hell a hedge is a form of speculation, and not all speculation is bad. Any other brain busters for me. I never said that speculation is bad. I own some gold and silver. However, it is not an investment and I don't treat it as such. I am speculating that the value of gold and silver will appreciate in comparison to the U.S. dollar. |
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Do most people not know what "net positive cashflow" means. Sure, a business, taxi cab, etc is going to take money to run. However, if it produces a net positive cashflow, it is an asset. WTF was so hard to understand about that.
A house you live in, however, costs you money and doesn't produce money. Owning it is a liability for you. |
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Many ad hominem and butt hurt responses on here. Look, the post is to get people to think a little bit. Many people thought their home is an asset, yet it costs them money to own it. Sounds like a liability to me. They also may have thought of their home as an investment, yet it is speculation. It's to get people to think a tad bit different about money and wealth. Net worth when you're talking about "assets" that cost money to own is a pointless measure of wealth. I would argue that wealth is created and sustained when you own assets that kick off a net positive cashflow. Long term wealth without some sort of compounding factor is elusive. "Assets" that are a net negative to own decrease wealth. Hasn't read like anyone here is butthurt, you just seem to feel the need to try and redefine terminology in use for probably centuries in an effort to sound enlightened. |
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Asset: produces a positive cashflow Liability: produces a negative cashflow. Therefore, these are not assets as they take money from you by owning them: -Cars -Homes (unless renting out to produce a cashflow) -Clothes -Guns Now, we can also discuss an investment vs speculation. Investment: owning assets that produce a positive cashflow Speculation: trying to "buy low, sell high". Basically betting that something you own is going to rise in value. These are not an investment: -most stocks (unless they pay dividends) -guns -homes (unless used to rent out) -precious metals -food You failed econ in high school, didn't you. |
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Many ad hominem and butt hurt responses on here. Look, the post is to get people to think a little bit. Many people thought their home is an asset, yet it costs them money to own it. Sounds like a liability to me. They also may have thought of their home as an investment, yet it is speculation. It's to get people to think a tad bit different about money and wealth. Net worth when you're talking about "assets" that cost money to own is a pointless measure of wealth. I would argue that wealth is created and sustained when you own assets that kick off a net positive cashflow. Long term wealth without some sort of compounding factor is elusive. "Assets" that are a net negative to own decrease wealth. I buy a commercial property to house my business in. I overpaid for the commercial property a bit or it's value drops over time. I bought (I will use constant dollars for you the property at 100,000. When I sell my business worth 100,000 now for 180,000 with the commercial property paid off. How have I not made myself more wealthy. I mean after all I could have just paid rent all those years and sold my business for 100k. So now what, under your plan I am a moron for losing 20k 
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haha...I knew this would start a bit of a firestorm. I know the definitions I gave are not "textbook" definitions of asset and liability. However, defining them in such ways, along with the definitions I gave of investment and speculation help one think a bit more critically about decisions they make financially. An "asset" that is costing you money (net) by having it is not a very good asset to own if you want to create wealth. Now, that is not to say that you shouldn't own a house, car, gun etc, but know that they are, most likely, taking from your wealth since they all cost money to use, maintain, etc and do not produce any positive cashflow. Get too many of those things going without something that is producing a positive cashflow, get ready for a world of financial hurt. You could have saved some wear on your keyboard and just said "live within your means". Right, I could have. I have noticed that no one has responded to the investment vs. speculation definitions though. The definitions that I offered there are linked to the way that assets and liabilities are defined in the OP. Also, I'm not sure how someone could say that something that is costing them money to own and is not producing money is not a liability. Ok, let me put my thinking cap on since you started the whole thread with a false premise. Speculation is engaging in a risky financial transaction in the attempt to make a medium or short term gain based on fluctuations in the marketplace. Investment is an attempt to make a profit from underlying financial attributes. There are various types and levels of speculation, hell a hedge is a form of speculation, and not all speculation is bad. Any other brain busters for me. I never said that speculation is bad. I own some gold and silver. However, it is not an investment and I don't treat it as such. I am speculating that the value of gold and silver will appreciate in comparison to the U.S. dollar. So then why isn't it a hedge. Then. I speculate the US Dollar could implode. Just like food storage is a hedge. |