Car : Asset or liability
In financial world, all objects are viewed weather they are assets or liabilities.
Types of Assets : Real estate, stocks, commodities(metals, grains etc), cash, bonds , mutual funds and so on
Types of liabilities : debt, insurance premiums, maintainance expenses and so on...
Where does your car goes? It goes into Assets and it is treated as depreciating asset (unless in it is one of those vintage cars).
So what does this mean? both assets and liabilities are either appreciating or depreciating.
It is nice to have appreciating assets. As we all know new car depreciates at very fast rate, it may not be great choice to have that car unles you intend to keep for more than 5 years. If maintainance of old car takes an average 5 hours extra per month and if 5 hours of your time is valid more, then it is better to go for new car.
Types of Assets : Real estate, stocks, commodities(metals, grains etc), cash, bonds , mutual funds and so on
Types of liabilities : debt, insurance premiums, maintainance expenses and so on...
Where does your car goes? It goes into Assets and it is treated as depreciating asset (unless in it is one of those vintage cars).
So what does this mean? both assets and liabilities are either appreciating or depreciating.
It is nice to have appreciating assets. As we all know new car depreciates at very fast rate, it may not be great choice to have that car unles you intend to keep for more than 5 years. If maintainance of old car takes an average 5 hours extra per month and if 5 hours of your time is valid more, then it is better to go for new car.
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