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Assets

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One of the inspiring persons by his quotes which are usually about financial success is Robert Kiyosaki. He likes to share his suggestions about the financial plan and how people can comprehend it. I also have some books written by him like "Cash Flow Quadrant" and "Rich Dad Poor Dad" that give me a new perspective. Some of his quotes also talk about assets. These are some of them.
Live it up! Buy everything you want… just by the assets to pay for them first.
I use debt to buy assets. Most people use debt to buy toys and liabilities.
Don’t buy luxuries until you have built the assets to afford them.
If you want to predict a person’s financial future, you have to look no further than the expense column. Are they buying liabilities or assets?
By making charity and investing in assets making expenses in his budget, my rich dad ensured that he would make them a priority. He called it paying himself first.

Firstly, we must figure out what an asset is. In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent a value of ownership that can be converted into cash (although cash itself is also considered an asset). [Wikipedia]

Another definition from Investopedia said that in the context of accounting, assets are either current or fixed (non-current). Current means that the asset will be consumed within one year. Generally, this includes things like cash, accounts receivable, and inventory. Fixed assets are those that are expected to keep providing benefits for more than one year, such as equipment, buildings, and real estate.
When we talk about assets, usually we also hear about liabilities. In financial accounting, a liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services, or another yielding of economic benefits in the future. [Wikipedia] I found a resource that gives some samples about assets and liabilities so I hope that we can realize the differences between them more easily.

These are assets.
  • Cash -- any physical currency and coins you have
  • Funds in the bank -- all the money you have in savings, checking, or money market accounts, and any certificates of deposit (CDs)
  • Stocks, bonds, and mutual funds: also list savings bonds
  • Retirement accounts -- include 401(k) funds, IRAs, and any other retirement accounts
  • Life insurance -- counting any cash value you have in the policy
  • Motor vehicles: the current blue book value of any cars, motorcycles, boats, RVs, etc.
  • Real estate -- the current market value of the property (house, condo, land, etc.) you own, even if you have a mortgage
  • Personal valuables -- including the market value of jewelry, collectibles (from baseball cards to art), and furniture
  • The money you're owed -- as long as you have a reasonable expectation of being paid back [source: Sahadi]

In reality, just because you own these assets doesn't mean you'll be able to access their monetary value today. Only cash and other highly liquid assets -- things that you can exchange for a good market value quickly -- are easily accessible. Although it might take months to turn real estate into its true cash value, use the full market value when calculating your net worth today.

These are liabilities.
  • Mortgage -- the principal or amount you have left to pay on your mortgage(s)
  • Home equity loan -- how much you owe if you have a home equity loan
  • Automobile loan -- the amount you have yet to pay on your car(s) and other motor vehicles
  • Student loans -- the amount left on student loans
  • Credit card debt -- any balance owed to a credit card company
Now, I always think about how I can build assets. I also always have ideas like building a valuable website, managing land, make business in trading, and so on.  But, Steve Job said, "Idea is cheap". Yeah, implementation is the important one. I must learn more, work more, and do my best.
Don’t just try to find great opportunities. Find an opportunity and make it great.
Rich dad is about teaching you how to mind your own business rather than having others run your life.

References :
http://en.wikipedia.org/wiki/Asset
http://en.wikipedia.org/wiki/Liability_(financial_accounting)
http://www.investopedia.com/terms/a/asset.asp#axzz22rsUwhkJ
http://money.howstuffworks.com/personal-finance/financial-planning/net-worth1.htm
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Comments

  1. UnknownOctober 16, 2012 at 12:07 PM

    That really is an inspiring book. Plus it sounded like what I really wanted to hear, words that really matter and something that would work in our days, not just any obselete ideas from the past.
    limited liability company

    ReplyDelete

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