When you go to get a loan and they ask to list your assets and liabilities to determine your credit worthiness, guess where cars and real estate goes. Under assets, not liabilities. The loans you have on the assets are liabilities.
And yes for the bank, your house and your car are an asset
for them because they can sell it off if you default on your loan. But for yourself your car, your phone and your house are not an asset.
So it's an asset for the bank but not for you? How arbitrary. The bank isn't asking you to list
their potential assets, it's asking you to list
your current assets, and you put car under assets because it's an asset. Things with value are assets, that's why on every quarterly financial statement filed with the SEC, public companies run down their list of assets and have it approved by an accountant. All of those assets depreciate over time, in fact there's even a specific line item on the income statement called "Depreciation and Amortization" which increases as assets lose value, but they're still assets until they're worth zero. It's really sad how you keep telling me I'm financially illiterate and yet you know so little, as detailed by this next portion of your response, where you say 401ks are a dumb idea, then reveal you know absolutely nothing about how they work.
Under your definition, your 401K account would be a liability because you have to pay brokerage fees. Is a retirement account that holds $50,000 in it an asset or a liability?
First observation: a 401k is a dumb place to put your money, the government knows where your money is you get taxed when you put money in and they tax you again when you get money out. When they feel like it, they tax it some more or just plainly confiscate it (like they did in Hungary). Try getting money out before retirement and you get penalised again.
Second: how much net result do you get from a 401k? Do you get 100% of the profit or are the managers of the funds keeping 80% of the profits? And those profits, are they taxed as ordinary income (sometimes as high as 35 or 50% depending on the country you live in)? I bet that inflation is rising faster than the increase you'll see over the lifetime in a 401k, thus robbing you of money.
Third: are 401k's free of risks of a market crash? Can you get an insurance to get your money back like with real estate or even a car?
Can you go to a bank and ask for a loan to start a 401k? Why not? If it's an asset, then the bank should be happy to loan you the money? You can get a loan for something as stupid as a car...
A 401k is an investment but a stupid one that is costing you money in the end. But if it wasn't for 401k's people would not save for later anyways...
This is a pretty clueless post. You start by criticizing 401ks as stupid, then say/ask a bunch of things that show you have absolutely no idea how 401ks work, then end by again saying 401ks are stupid.
Since you seem so unfamiliar with 401ks, I guess I'll start with the basics. The government does not tax you when you put money into a 401k. The money going in is pre-tax, and income is tax-deferred until you withdraw it. There are many types of retirement accounts, 401k is just one. There are also IRA, SEP, and others, but the benefit of all of these is that they allow tax-deferred investment growth. If you don't understand what that means, or why it's so beneficial, do one of your handy google searches, as you ironically condescendingly demonstrated previously in this thread.
Second, you have just identified yourself as being concerned about hiding your money from the government so you don't have to pay taxes, which now calls into question every bit of financial "advice" you've given here, and it now makes perfect sense why you don't understand the difference between an asset and a liability. If you're worried about tax evasion, you're right, having bank accounts and retirement accounts are probably a bad idea because it makes it easier for the government to tax you, but they're not a bad idea because it's unsound investment advice.
Third, there's no such thing as a risk-free investment. If you don't understand that, hoard your money in a mattress and watch it depreciate over time, but that's a risk too, either that it will be stolen or just devalue. You cannot separate risk from money, no matter what you do, you can only seek to manage the risk, and investing is about risk management.
Fourth, try looking up an actual fee schedule for a 401k so you don't sound so damned ignorant about what the fees are. There are many types of retirement account programs run through 401ks or IRAs. You can choose to manage your assets in your 401k on your own and not use a manager to reduce the amount of fees you pay. However, if you do use a manager, there are plenty of high-reputation companies with fees under 1%. So to answer your extremely misguided questions, you keep the proceeds of the investment, the fees are about 80 times less than you posited, and you pay 0 taxes on it until you withdraw, at which point the tax rate is ordinary income if you've reached retirement age.
Last, tax-deferred investment returns crush, and I mean
absolutely crushes, depreciation of the dollar due to inflation, so you can stop with that nonsense straight away.
Judging by how clueless you have demonstrated yourself to be, you might consider being less antagonistic in your demeanor. It only invites hostile responses. If you care to have a civil discussion about any of this, I'd be happy to continue. But another post full of idiot-calling or proclaiming the superiority of your knowledge after having just made a fool of yourself will not be answered, because frankly there are far more interesting threads to participate in than arguing with someone who hasn't a clue.
