finances

Buzz: Inner8 – Can you be one of the Inner 8?

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It’s the holy grail of the Internet these days: the social ‘net. Every major industry has joined, and now it’s the turn of the investing fraternity to get the kind of social feature set now found in Facebook, MySpace and much more. Inner8 seeks to provide a similar social service for investors. InvestorBlogger, as one of the earliest members to join SocialSpark in the pre-launch period, is delighted to be one of the first to review this social service.

Inner8

True to form, you will find all the social bells and whistles you need for this online investors’ community called Inner 8 which seeks to bring investors of all kinds together under the following statement “Inner8 technology gives you the best, personalized ideas, and lets you keep the savings“. Given the background of the owners of Inner8, this site should not be underestimated as it tries to bind investors with complex data analysis.

The deal for investors though is quite simple: you connect with investors from a wide range of backgrounds as you all seek to make money trading online, whether it is stocks, bonds, or whatever. There are several pages in which you can interact: Tools and Community.

The tools page is worth playing with: you can simply tweak the controls at the bottom to show what kind of market segments you are interested in, then you will see the results on the right.

scenario explorer

The community page is also worth a look to find people online who are investing. There are similar slider controls that you can play with as you search for members to form your community.

Both tools and community pages are works-in-progress as the range of tools are limited, as is the size of the community. But one thing is sure: if Inner8 sticks around long enough, they will be able to develop a focused and passionate group of users. The tools are innovative and promising, as is the community. I’ve already joined, and have filled in a bit of my profile.

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Assets vs. Liabilities

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A reprise of Rich Dad Poor Dad. There has been much discussion of the authenticity of RDPD’s and the background of the author. You can read about that at other blogs: Rich Dad, Poor Dad, Liar Dad, Thief.  However, one criticism of the book is below along with my own interpretation of RDPD’s theories.

Jeff writes – “You tried to demonstrate that a house is a liability because you pay property tax on it. That is irrelevant. You also have to pay a tax on your car (license fee). Does that make your car a liability? You pay taxes on your income. Does that mean that earned income is a liability?”

Actually, RDPD clearly defines an asset as something that puts money in your pocket and a liability as something that takes money out of your pocket. So, if you live in your house, you pay a mortgage, taxes, etc., it is effectively a liability because the money comes out of your salary to pay this stuff. In other words, the house is costing YOU money.

Whereas if you rent out a house to someone who pays rent, as long as the rental income covers ALL expenses (inc. taxes) plus a little, the house becomes an ASSET, ie. it is making money for you.

In truth, this is a simplification of the situation, as in a balance sheet, a house with a mortgage would be recorded twice, as an Asset and a Liability. Anyway, he makes an interesting point that our passion for buying houses to live in really isn’t such a great way to make wealth (except through capital gains) as it produces no regular benefit.

But I do think he makes an interesting point: somethings that we attribute as having asset value aren’t really assets at all. A Car is a quickly depreciating asset, and if you are paying car loans, some of the time, the net difference between the value of your car and your outstanding loan may turn it into a clear liability on your personal balance sheet, esp. in the first six months where you haven’t paid anything off, and the car has suffered the sharpest decline in its value.

“A house is an asset, period. ”

Another point that RDPD makes is that yes, the house is an asset, but the question is whose? If you buy a house and its price decreases, your mortgage (assuming you have one) shifts into negative equity position, ie. if you sold, you would still have to repay the amount of the loan beyond the sale price of the house. Could it be said to be an asset then?

And if you don’t believe, do you honestly think that housing prices will keep heading up as they have been doing so ‘Mmm’.

Does this clarify things a little?

What I admire is RDPD’s ability to string simple observations out to a whole book! That’s quite an achievement. I did enjoy playing the game, though it is pricy.

Kenneth

Should I go back to work?

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What do my readers think? Should I go back to work or keep working on my business?

Our school is now not really able to pay me much of a salary, because of the lack of profits in the coming six months. We’re facing a cash shortfall at home as well in the short term, because both of our incomes are dependent on the business.

I have considered going back to work, to stabilize our family income, but I wonder if that would take away from the experience of, and need to, looking at our business and trying to make the machine work better.

I’d appreciate some input on this matter from readers… so comment away.

Kenneth