For many people, their home is the single biggest investment that they’ll ever make. And that’s a good thing. Home prices tend to go up over time, so while your mortgage is going down over 30 years, the value of your house is going up. This has a double positive impact on your net worth (increasing assets and decreasing liabilities) and leaves you with more money.
Principle 4 tells us to:
Invest in appreciating (or at least neutral) assets only.
This includes things like a house, a small business, or rental property. On the flip side, this principle also advises us to avoid those assets that decline quickly in value – like new cars. As we explore this principle, we’ll discuss these issues and how to address them.
Click here to read about Principle 5.
Love this idea.
I have a Mazda Miata 96 that I love.
Kind of old, but runs perfectly.
I have given it a lot of care, and I see the care I give the car as an "investment". It allows me to avoid having to buy a new car.
So... Invest in appreciating stuff.
MAINTAIN the non appreciating stuff, so that you can invest more in Principle #4.
Posted by: Jose Anes | June 02, 2005 at 01:47 PM
thats not a good thing because if ur house is ur biggest asset ur in trouble ,with liabalities such as maintence mortgage and paying the bank ,thats a bnig no no u see alot of people in america dont know the diffrence between assests and liablities some think they do have assest but is really a liabiltiy
Posted by: | October 13, 2007 at 03:57 PM
Your house is only your asset if your mortgage is paid off, until then it is a residual income asset to the bank and your liability.
Posted by: | June 06, 2008 at 12:21 PM