archived_user
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- Jun 18, 2026
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- #21
It is also good to have a big gold chain around the neck. If something happen you can sell it and pay an attorney. This chain (about 2-3 kg) is also a liquid asset.
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Net worth of ohai < Mr. Tohai wrote:
Yes, if you have a large gold object with significant value, you should include that in your net worth. What are you saying?
You’re basically saying that all other things being equal, renters are worth more than homeowners. While I agree that they are certainly more liquid, I disagree with the idea that buying a house hurts your net worth and hurts your financial well being.Sweep the Leg wrote:
^The actual answer: It’s a huge outlier for the average person so it skews results. You could almost think of a person’s net worth being like a company’s Quick Ratio. You take cash and marketable securities (and accounts receivable, but that just makes the metaphor more confusing) and divide it by short term liabilities. A house wouldn’t fall into either the nominator or denominator. It’s illiquid so not immediately marketable. Or, it’s a long-term liability.
By removing it entirely, you get a pretty clear picture of that person’s current financial well-being.
Flashback wrote:
..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.ohai wrote:
If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.
Well if you’re not counting home related assets or liabilities then you’d never know that the guy who is upside down on his mortgage has a -$4 million net worth.Flashback wrote:
..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.ohai wrote:
If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.
That’s not at all what I was saying. I was just explaining why homes are left out of many net worth calculations.cj4g wrote:
You’re basically saying that all other things being equal, renters are worth more than homeowners. While I agree that they are certainly more liquid, I disagree with the idea that buying a house hurts your net worth and hurts your financial well being.Sweep the Leg wrote:
^The actual answer: It’s a huge outlier for the average person so it skews results. You could almost think of a person’s net worth being like a company’s Quick Ratio. You take cash and marketable securities (and accounts receivable, but that just makes the metaphor more confusing) and divide it by short term liabilities. A house wouldn’t fall into either the nominator or denominator. It’s illiquid so not immediately marketable. Or, it’s a long-term liability.
By removing it entirely, you get a pretty clear picture of that person’s current financial well-being.
If anyone has a 25MM mortgage then at 4% rate the person is paying $1.4MM a year on mortgage which means he is making a bank. Anyone who makes over $2MM a year on a consistent basis to secure a loan like that is worth millions and definitely in the top 1%.Flashback wrote:
..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.ohai wrote:
If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.
That’s normal situation in many countries maybe is not usual in yours. It is not easy to get mortgage loan on some emerging markets and it is expensive source of financing and is often overcoraterallized. It is often situation for mortgage borrowers on emergings that must enter into loan in currency other than domicile and are exposed to currency and floating IR risk over long term. There are mortgage with expiration of 20-30 years.infinitybenzo wrote:
If anyone has a 25MM mortgage then at 4% rate the person is paying $1.4MM a year on mortgage which means he is making a bank. Anyone who makes over $2MM a year on a consistent basis to secure a loan like that is worth millions and definitely in the top 1%.
Maybe if you have family thus home would be an inheritance for your children. Or your home is in attractive area, has its residual value which may appreciate as time passes.infinitybenzo wrote:
If you actually build a “model” that compares “rent vs ownership’ it becomes very very clear that hands down owning a home is infinitely beneficial compared to renting.