learn about money(lesson 2)

ASSET AND LIABILITY 

Ram and BHEEMA moved to their respective places after exchanging their contact numbers. Both were excited for their contact with their childhood friend after a long time. Bheema was discussing with his wife about his acquaintance with his childhood friend and their conversation. Later bheema went to park and neighbouring roads which is also his daily routine, he found a well furnished house with modern amenities at a affordable price. In excitement he ran to his house to inform his wife,her suggestion of contacting his friend bought his excitement to bottom as he was bit egoistic,however later agreed to her suggestion and contacted his friend ram.

BHEEMA: Hello is this ram?

RAM: Yes how are you bheema.

BHEEMA: Fine 

RAM: Hope everything is well.

BHEEMA: yes

RAM: Is anything wrong, bheema.

BHEEMA: Conflict of opinion.

RAM : What is it?

BHEEMA: I found a well furnished house,however my wife is not happy with purchasing it, tell me isn't it good investment.

RAM : What is an investment?

BHEEMA: Is it you! who is asking this question don't you know some thing which we own.

RAM: Its not, It is something which gives you better returns than the amount you invested.

BHEEMA: Ha yes that is what I said.

RAM: How that is generating you income.

BHEEMA: What income? How house can give money.

RAM: That is why I said you this is not an investment but expenditure.

BHEEMA: What?

RAM: To understand this you must know what is an asset and liability and its difference.

BHEEMA: What is it?

RAM: An asset is something which you own and generates a cashflow(adds to your income) , a liability is which you own and adds to your expenses.

BHEEMA: How can my house be an expenditure.

RAM: Maintanence of your house such as electric bill and water bill.

BHEEMA: Yes, I did not give a thought about this. So what should I do now.

RAM: Purchase an apartment or a three storey building and rent it,then apply for a loan in bank of amount of house which you currently want to own after pay back your loan with the rent you receive at the end after paying your loan which may take two years you will find it yourself with two properties.

BHEEMA: Wonderful Ram.

RAM:  Do it now don't wait for anything.

BHEEMA: Yes, thank you 

Call disconnected

LESSON LEARNED 

An ASSET is something which gives you  a

regular cashflow.

Eg: rental, shares.

LIABILITY is which adds to your expenses 

Eg : car, electronic gadgets

ASSET PUTS MONEY INTO YOUR POCKET LIABILITY TAKES MONEY OUT OF YOUR POCKET

               -ROBERT KIYOSAKI