Wow - opened a can of worms here

)
Yep - *they* are all liabilities. *Not* the house.
Of course, if no-one is living there, then (most of) these will disappear.
So they are not related to *owning* the house, but to *living in* it.
I'll concede that they're mostly due to living there, but most people buy
a house to live in yet still call it an asset, whereas I wouldn't
(necessarily). But I'd call bills expenditure not liabilties.
Fair enough - so call them "income-producing assets" or "non income
producing assets". They are both assets!
Probably an easier way to explain the concepts, adding in "loss producing
assets" as well. Buying petrol is purchasing a non-income producing asset
(it just gets used up) whereas buying a car is loss producing (assuming
you fill it with petrol periodically, sincethe act of owning it creates
more expenses (the cost of buying petrol, among other things).
Well why not call them George & Fred then?
That would just be confusing
No it won't - because I know what I'm doing!
Well actually, probably not. If pumping in "several *hundred* pounds a
month" actually made the VALUE of the shares increase by "several *thousand*
pounds a month", then I'd certainly *not* be getting rid of them in a hurry,
if I could help it!
Consider the following two "assets" (proper definition!) :-
(1) An asset that requires an influx of £100 per month, but which
increases in value by £1,000 per month; (I guess you'd call this a
"liability"!)
(2) An asset that produces an income of £100 per month, but falls in value
by £1,000 per month;
I would *much* rather have (1) than (2) above, but it appears that you'd
prefer (2)!!! Care to explain why?
You've got me wrong. Asset 1 has a net increase in wealth of 900 per
month, so it's a true income-producing asset. Asset 2 is a loss-producing
asset, much like owning a house is for some people (it increases in
capital value gradually, so adding to your wealth, but drains your income
at a faster rate). The mechanics of interest repayments make that a
certainty a lot of the time ;-) I always work out that _actual_
repayments to be the total %age in interest rather than look at APRs.
Seeing a loan repayment of 200-250% of what I want to borrow certainly
makes me think twice about getting into debt casually.
I suppose I should have been more specific in the example: pumping in
several hundred pounds a month to support, say, a short sell of a bunch of
shares that were rising in price and you had to either buy out (and
"realise" your loss) or meet the margin call and, er, pray.
Besides, something like Asset 1 looks like the sort of asset that you
could leave alone and skim off the profits to buy more assets. Let your
money work for you, rather than you having to work for your money!
Bennett