Buy assets lease liabilities

[Dr Jekyll]

I've seen this expression a few times, can someone explain what on earth it means?

[keith333]

I think its saying you should own assets which are likely to appreciate such as a house. When you lease/rent something you don't own it and if its likely to go down in value, then better to lease/rent than own it.

Cars, boats, places I know are really assets, but they go down in value and perhaps the saying should be "buy assets which appreciate and lease/rent assets which depreciate".

[FLASHG1981]

keith333 said:

I think its saying you should own assets which are likely to appreciate such as a house. When you lease/rent something you don't own it and if its likely to go down in value, then better to lease/rent than own it.

Cars, boats, places I know are really assets, but they go down in value and perhaps the saying should be "buy assets which appreciate and lease/rent assets which depreciate".

I would use the expression an asset is something that makes you money / pays an income and a liability is something that costs you money to own.

So assets would include
stocks / shares that pay dividend
rental property
bonds

Liabilities
the home you live in
cars
boats etc

although the items i have listed as liability can be sold they cost you money to own / maintain.

[sidicks]

keith333 said:

I think its saying you should own assets which are likely to appreciate such as a house. When you lease/rent something you don't own it and if its likely to go down in value, then better to lease/rent than own it.

Cars, boats, places I know are really assets, but they go down in value and perhaps the saying should be "buy assets which appreciate and lease/rent assets which depreciate".

That's probably what's intended - but clearly it's total bks.

If you want to lease an asset, someone else has to buy that asset and lease it ti you. They aren't going to absorb the depreciation themselves, they are going to charge you for doing so, with a contingency margin on top.

At best leasing protects you from unexpected depreciation, not expected depreciation!!

Sidicks

[FLASHG1981]

sidicks said:

That's probably what's intended - but clearly it's total bks.

If you want to lease an asset, someone else has to buy that asset and lease it ti you. They aren't going to absorb the depreciation themselves, they are going to charge you for doing so, with a contingency margin on top.

At best leasing protects you from unexpected depreciation, not expected depreciation!!

Sidicks

That's the main thing you need to take into account cost of depreciation and premium for the lease versus the opportunity cost of not having the money tied up so you can use it for other things.

[longone]

The expression is glib and shallow and not meant to convey more than a notion of value seeking. Assets are often leased but with an option to buy included (a mortgage or futures contract on margin). The purchase of debt is common place and is an example of buying a liability.
If it has any use it reminds us that uncertainty is best financed using someone else's money, and for a sure bet use your own. A bit like 'look before you leap', oh but 'nothing ventured nothing gained'. People drop them into conversation to confuse and impress.

Colin.