Assets as Kiyosaki puts it are things that put money into your pocket. Liabilities pull money out of your pocket.

A house does very little to put money into your pocket. Sure it goes up in value but you can not really use the “Equity” until you sell. the whole time your paying out of pocket to live in a home. Why do people sell their homes most times then not? Easy, to move into a bigger home, where they use the “Equity” of their last home to put towards their new bigger home and move up in the middle class. So essentially they will never get to touch the “Asset” part of their homes “Equity” Very few people will ever fully pay their house off. Most people will take the “Equity” out of their home to pay off debts (liabilities) leaving them owing more now to the bank for their house then the “Equity” that is still in the house.

In the long term a rough estimate is a $200,000 home will cost you over $350,000 – $400,000 by the end of a 25year mortgage. So your paying out the nose for something that the interest is eating you a live. How is that an asset?

We all need somewhere to live. You can’t just sell your house and Tada your made a profit. Now where are you going to put your profit? Exactly, back into another home so you can have a warm place to sleep at night. Cha-Ching, back into the liabilities column you go. its taking money out of your pocket again. Rarely do you see a direct “Flow” of cash.

Some of these guys here need to re-think R. Kiyosaki’s words “Cash flow”. Its’ the flow of money not the “sit and wait years till its worth something” type of idea. Where is the flow in sitting and waiting 25 years? most of you will probably be dead by that time. If you want your money working for you right away, focus on the “Flow” of cash to pay for your living style. i’m 26 years old high school drop out and I know that. Hell, i’ve already made my 2nd rental property transaction and its brining in an additional $600/month in “Cash Flow” on top of my existing rental property of $535/month into my bank account every month. These combined pay for my mortgage on my current condo just outside of downtown as well as my strata fees and taxes. I’m living free and clear on my “Cash Flow” and use my money from my 9-5 to start investing into more assets.

Some people who bring down R. Kiyosaki as a “Fraud” or “Used Car Salesman” really need to get their heads out of their asses and take a look at their own life. Get out of the stage of denial and give your whole life a shake. Your too old or your too stuck in your ways and obviously paddling against the tide because your working in the wrong direction fighting for financial freedom that if you just turned around would come so easily to you.

As R. Kiyosaki says in a lot of his work, does a stock broker invest in stocks? does a real estate broker invest in real estate? I wrote a paper on this to explain to my boss that 1 out of every 10 people I interviewed actually did personally what they try and do every day for their 9-5 job. Thats 1 our of every 10 stock brokers actually invest in stocks. It was quite depressing. After interviewing 160 people only 16 of them knew what they were selling and stood behind it by investing as well.

I come on here telling you these things because i’ve done them. Some of you sound like you come on here with your “Opinions” THINKING you know what your talking about, in most cases you do have valid points, others, just sound like your running a dead end program in your personality and that your to afraid to research the truth or your in denial about money and investing.

Do this, get rid of the word “Net Worth” and use the word “Financial Wealth” do this test to see how you fit. Financial wealth is how long can you last with out a paycheque? most people can not survive more then a month with out a paycheque. If your home is an asset where is the “Cash Flow” to help you if you lose your job? most chances your going to have to foreclose your house because you can’t afford to keep up on the payments…. Right now, if I lost my job, my condo is covered, I can keep a roof over my head and the head on during the winter. My liability, which is my car, would have to go but that will change when i close the 3rd property in the near future.

If your offended or angered by what I wrote, please, explain your self, i’d love to hear it.

Cheers
Dom

Net worth should/will include one’s equity for most people.

I personally don’t intend to ever buy a house. I don’t want one. I don’t want to feel tied down and I don’t want the hassle. Is it better to buy than to rent? Yes, IF you live in the house for several years (5 ). Which the average person/family doesn’t.

The home is an asset. The mortgage is a liability. They are two separate things.

The absence of income from the home is irrelevant to the question of whether something is an asset: lots of assets do not generate income: zero coupon bonds, bank bills, bullion, art, wine,shares that do not pay dividends and your home. The fact that there may be cash outflows does not turn an asset into a liability. Lots of assets generate negative cash flows over part or even all of their economic lives: consider any business development project (take a property development or an oil and gas field as examples), a negatively geared investment property, a wine collection or an artwork.

Whether or not something generates a positive “return” and the size of the return is also irrelevant to the question of whether your home is an asset: those are factors which determine whether or not it is a good investment. (Credit card driver’s comment above is also relevant: there are important non-financial considerations to owning a home.)

The fact that there may be a liability (mortgage) secured against the home does not turn an asset into a liability. Why should it? They are two separate concepts. If the fact that a liability is secured against a home turns the home into a liability, then the same logic requires that any asset (e.g. investment properties, shares brought on margin) which has a liability secured against it to be treated as a liability.

I fail to see why a home (and the mortgage liability) should not be taken into account in determining net worth for general financial purposes. Compare a person who rents and has no savings with a person who owns a home with no debt but has no other assets. (An extreme example but it illustrates the point.) If you exclude the home from the second person’s net worth then both people are in the same position – which is obviously not correct. Financial institutions which prepare wealth surveys often (usually?) exclude it. However this is done for the simple reason that the institutions are looking for potential clients and, for this purpose, they recognise that an owner occupied home is unlikely to be something the insitutions can earn a mandate to manage.

Relying on your home as a source of retirement savings is probably a bad idea. I appreciate that this is more debatable but I see no logical reason not to at least acknowledge the value of the asset for financial planning purposes. It certainly can and should play a role in financial planning – and it does in mine.

Without wishing to be inflamatory, I fail to understand any of the arguments put forward for claiming that a home (with or without a mortgage) is a liability or for excluding a home from a net worth calculations.

It’s a point that’s well worth considering. I live in a rented apartment, but I am about to close on a condo that I am going to renovate and rent out (my first real estate purchase). If all goes well, I will do this two or three more times before I buy something for me to live in personally. Hopefully by that point, the mortgage payments on my personal home will be more than covered by the rents from the rental properties. This is what Kiyosaki calls “buying assets to fund your liabilities.” He’s obviously not against homeownership, but he wants to change your way of thinking about it. Yes, it is an asset in the traditional sense…. a very illiquid, non-movable asset that sucks cash on a regular basis. Should you really be so proud of such “assets”?

I will probably never fully “own” my house because a house is a very static and wasteful place to hold that much value.

I personally love the 100% down payment plan on houses, but that is totally unrealistic for most people. Why? Because a few generations ago, our parents and grandparents started financing everything. That means that a minority of parents are able to help jump-start their children into a house and a debt-free lifestyle!

Imagine what life would be like for your children if you could start them off with a paid-for college education and a paid-for house!!!