HOUSE IS NOT AN ASSET.
If you start surfing internet than you will find thousands of article regarding this topic. Mostly people gave refrence of Robert Kiyosaki the innocent guy and author of the famous book "Rich Dad Poor Dad".
These Intellectual Idiots even don't know, what exactly the Asset is. Asset is not just a simple defination to explain that "anything which generate a cash flow and put into your pocket is called an Asset and anything which take out money from your pocket is called Liability.
If it so than, It means your wife is also a Libality. She also took money out from your pocket and your Childrens, they also fall in the category of Libality, what about your parents brothers & sisters.
If the Robert Kiyosaki say so in his book then he also said in his book that one must be get out of Liability as soon as he can. So what should we do now. Leave our parents, our childrens, our brothers & sisters........
One thing I forget to mention, we the human beings I mean our body. Our body also took out money from our pockets for their need to nurishment at least three times a day, so it is also a Liability. What we do " do sucide".
all Bullshit !!!
I am not so genius as Robert Kiyosaki or anyone else but one thing I know very well and quit sure about that and you also OPEN YOUR EYES AND EARS and note this thing," that
"House is neither an Asset nor a Liability it is a basic need of all the human beings".
Not only the human beings, Animals and birds are also follow this. They also make Shelters and Nests when they need it.
So don't even thought that your house is your liability. Yes it's very much true that your house cost you little amount each month for their maintainance but it doesn't mean that it is liability.
In another case, if you are living in a rented house and dreaming about your own house and want to apply or already applied for a home loan, go for it without hesitation. But first try to generate a passive income which can afford the EMIs of your home loan, because it is not the home which is liability, it the loan amount and EMIs which are actually liabilities. Home is your basic need same as you eat food, drink water and breath air.
My request to all the Intellectual idots, those who already wrote in their articles and blogs that " Home is not an Asset", Please don't try to fool peoples.
Home or House is a basic need of human beings that every person in this world must have their own, under which you can live peacefully and plan more efficently your financial goals and it does't matter how big or small it is.
AFTER ALL IT'S YOUR OWN HOUSE. live happily
In simple words the term "Assets" means, anything which generate money automatically or put cash in your pocket is called Assets such as Real estate, Mutal funds, Bonds, Savings, Gold, Diamonds, Business, Income from royalties etc.
All these assets we mention above are man made assets, created by a man, but the biggest and one of the most valueable assets which is provided by god to every single human being on this earth is TIME.
I repeated so many time in my articles that it is the TIME which make things valuable.
So, when you invest somewhere always give some time to your investments to grow and give you better returns.
INVESTMENT x TIME = VALUABLE ASSET CLASS
The golden rule of investment is that the more assets you have, the more liabilities you can afford
Let's we take an example of Deepak.
Deepak is working in Marketing company and getting salary Rs 25,000. He did not have any kind of asset but after savings of last five years he can able to accumulate Rs 5 Lakhs in his saving account. Now he decided to buy a car. He have two options, either he buys the car cash from his savings or he go for some car loan from bank with nice interest rate. We analysis both cases
In Case 1 : If he buy a car cash from his saving than he lost all his saving which he accumulate in last five years after working very hard.
In case 2 : If he go for a car loan than he have to pay Rs 5000 (approx) monthly installment which he have to deduct from his salary and have to survive with Rs 20,000 for next five years.
But here Deepak choose the third option after getting advice from good financial consultant.
He decided to buy a piece of land of 2000 sq ft for Rs 5 Lakhs and decided to keep this land for 10 years. As we know the population of world is increasing day by day and the demand of all basic needs are also growing, so he should expect a good returns ( approx increase of 25% to 30% annualy ) of his investment which he had it made today.
But if he is a smart investor and he invest the same amount to buy an apartment or a building which he can be able to give on rent of Rs 3000 to Rs 5000 monthly than he should earn a extra income from his investment and after a period of 10 years also expect the same returns mention above.
Now Deepak can be able to buy a car. He can go for a loan from any bank and pay the loan EMIs from the rented income which he is getting from his investment on real estate. Now he have a car and also have an asset which can grow day by day and also provide a steadily passive income for him.
After five years when he clear all the amount of car loan he can go for another loan to create another assets.
The above calculation is just for an example. One can also buy a land and construct a building on that, depends on individual.
But the idea behind all this, to divert the loan amount EMIs to your rent income which you generate from your investment in real estate.
