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Assets are items that generate cash flow. If you live in it, it's a liability and not an asset. Just because its value increases in relation to funny money does

by kache_ 6y ago

Assets are items that generate cash flow. If you live in it, it's a liability and not an asset. Just because its value increases in relation to funny money doesn't mean it's generating cash flow. How much bitcoin do you need to buy a house?

gruez 6y ago
>Assets are items that generate cash flow. If you live in it, it's a liability and not an asset imputed rent is the cashflow if you live in it. https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent
gumby 6y ago
Because you have to pay something to live somewhere (that's how gravity + weather works) there's a cost. If you own vs rent you transfer that payment stream into servicing an asset. Assuming the asset goes up that's generating an implicit cash flow (one you will have access to later when you sell the asset). If you can buy your house with cash then your "housing" cash stream is suddenly freed to be spent elsewhere, so you "gain" a cash flow you didn't previously have. You can make a fair argument that this is a semantic quibble or one of the usual human self-deceptions but this is how people implicitly think of it.
Supermancho 6y ago
> If you live in it, it's a liability and not an asset. That's not a disqualification of an asset, if devaluation is outstripped by increased valuation over time. eg I live within a parcel, that parcel is not transformed into a liability.
curryst 6y ago
> Assets are items that generate cash flow. I would disagree with that. Stocks that don't pay dividends don't generate cash flow either. Assets are items that are bought with the intention for them to generate value. That value might be cash flow, or it might be an increase in value so that you can sell it later. Not all assets generate cash in real time (most don't). A house is an asset because a) it allows you to pay your liabilities for housing into an equity generating account, and b) people generally expect them to increase in value. To put it another way, if they weren't an asset, people wouldn't care if they depreciated. I don't care that my car depreciates because it isn't an asset; I don't expect it to increase its value or hold its value.

by kache_ 6y ago

gruez 6y ago

>Assets are items that generate cash flow. If you live in it, it's a liability and not an asset imputed rent is the cashflow if you live in it. https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent

gumby 6y ago

Because you have to pay something to live somewhere (that's how gravity + weather works) there's a cost. If you own vs rent you transfer that payment stream into servicing an asset. Assuming the asset goes up that's generating an implicit cash flow (one you will have access to later when you sell the asset). If you can buy your house with cash then your "housing" cash stream is suddenly freed to be spent elsewhere, so you "gain" a cash flow you didn't previously have. You can make a fair argument that this is a semantic quibble or one of the usual human self-deceptions but this is how people implicitly think of it.

Supermancho 6y ago

> If you live in it, it's a liability and not an asset. That's not a disqualification of an asset, if devaluation is outstripped by increased valuation over time. eg I live within a parcel, that parcel is not transformed into a liability.

curryst 6y ago

> Assets are items that generate cash flow. I would disagree with that. Stocks that don't pay dividends don't generate cash flow either. Assets are items that are bought with the intention for them to generate value. That value might be cash flow, or it might be an increase in value so that you can sell it later. Not all assets generate cash in real time (most don't). A house is an asset because a) it allows you to pay your liabilities for housing into an equity generating account, and b) people generally expect them to increase in value. To put it another way, if they weren't an asset, people wouldn't care if they depreciated. I don't care that my car depreciates because it isn't an asset; I don't expect it to increase its value or hold its value.