Asset or Liability decisions

**Buy assets or liabilities? **

Elon Musk had a little money after selling his first company. He was torn between buying a house in Palo Alto and a McLaren F1 sports car.

Later, he bought a sports car. The remaining money was not enough to buy a detached house, so I bought a very cheap townhouse apartment.

According to the financial management formula, if you buy a house, it can appreciate in value and it is an asset. Moreover, in Palo Alto, it is a high-quality asset. But buying a car not only depreciates the value, but also costs money to maintain it, which is of course a liability. Moreover, it is a top-notch sports car with poor liquidity and an absolutely inferior asset.

However, can it be said that he made a bad investment?

If he had used the money to buy a house, it would have increased by about five times. It was one million at the beginning and five million now, and that's it. But he spent the money to buy the world's top sports car, which inspired him to build the Tesla Roadster. Later, he also developed various affordable models, making him the richest man in the world.

Buy an asset and multiply it five times.

Buy debt and become the richest man.

So, which one to buy? In fact, the boundaries between assets and liabilities are not so clear. A lot of consumption that looks like liabilities is actually investment.

So, is the Apple Vision Pro an investment or a liability? Is a good suit an investment or a liability? Is a car that you can’t wait to drive to work every morning an investment or a liability?

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