Asset = any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, a house, a car, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings.
Liability = A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation.
In Finance when you combine Liability (leverage) + Assets when prices are rising you maximize your profits. However, when prices are falling debt also maximizes your loss.
You should never combine debt when purchasing assets that are sure to decline: Cars, Jewelry, Vacations, Clothes, etc...
Houses, Land, Financial derivatives, and your education should be the only sustained use of debt if you want to eventually retire.
If you're 30 or younger I would put 100% of your money invested in equities (stocks). Max out your 401K match and anything leftover put into a Roth IRA. The thought is that you pay the tax upfront but aren't taxed on any gains down the road. Your tax bracket now should be
Over the long-run stocks outperform real estate almost 2-1 or 3-1 depending on your risk tolerance. If you plan on living in the same area / location for 4 + years then owning a home is much better than renting; however, if you plan to buy n sell during a shorter amount of time the ***** costs will kill you.
If you plan on retiring in 40 years are around 60-65 then you'll probably need $1 million + per individual (married couple = $2+ mill). If you can start at 18 (saving 2 - 3 k per year) and increase your savings habits as your income rises then you shouldn't have a problem reaching this mark.
