Financial Freedom 101 : Liability vs Asset

A lot of people seems to misunderstood the meaning of liability and asset. Here's what I think of what is a LIABILITY and ASSET:

LIABILITY- something that you'll be held liable if you're not able to pay-up. (eg: house you're staying, car, credit, mortagages)

ASSET-something that would be able to self-sustain or increase in value, or in layman term, CASH MACHINE. (eg: rental yield from real estate properties like shophouses or residential, intellectual property rights, royalty from copyrights, self-sustaining business).

To gain financial freedom, one should always acquire as many asset as possible and reduce liability to minimum level.

A lot of ppl seems to think that the property they stay on is an asset. It is in fact a LIABILITY! Just imagine that if you got retrenched tomorrow, how're you gonna pay your mortgages?

An ASSET, (eg: a shophouse rented out) on the other hand is able to stand by itself even if you got retrenched as the rental fetched would be able to cover the monthly installments. Even if the shophouse's rental is just enough to cover for the monthly installments, the rental yield will certainly increase over the years and indirectly, your ASSET is working for you. This is a good example of how to make MONEY WORK FOR YOU!

In other words:
LIABILITY- You will never stop working for money, and it'll still be not enough.
ASSET-The money will work for you, the more you acquire an ASSET, the harder it works!

Friends, do ponder and challenge the thought...