Who’s richer? Siapa lagi kaya? Part 1

Here’s something to think about.

Consider this:

You own a one-billion-dollar asset, fully financed by the bank. i.e. you took a loan of $1 billion, thus owing $1 billion.

The homeless person you usually see on the streets has no assets at all and has no debts.

Assume also that other things remain constant (ceteris paribus).

Now, the question is, who’s richer?

If your answer is, you’re richer, then you’re probably wrong.

Net worth-wise, that homeless dude is way richer than you are. Why? Well, if you think about it, he’s actually richer by $1 billion. This is due to the fact that you owe the bank $1 billion and he owes the bank nothing.

Morale of the story:

1. Accumulating wealth is not only about accumulating assets but also to consider the impact towards your net worth and how much money you can harvest from those assets (through capital gains and income).

2. Most important of all, don’t look down on others that practice non-extravagant lifestyle 😉


Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.

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Back to Basics: Asset, Liability, Equity
Why Everyone Should be Wealthy
Why Not Everyone Can be Wealthy
Passive Income Exceeding Expenses
Journey Towards Financial Freedom: Food for Thought
What is more important to you? Money or Family & Friends?

About nadlique

This blog is about the journey of a 28-year-old Malaysian towards financial freedom. This blog was started back when the blogger was 21 years old. However, his journey towards financial freedom had begun way before that. Materials such as investing, business, entrepreneurship, equities, and real estate are presented. The author also posts his thoughts and observations on life in general.


  1. Nice article! I will vote the homeless guy too. However, if you know how to play around with the one-billion-dollar asset, then it is probably a different story.

  2. Thanks 🙂

    Yup, if you had an asset worth a billion dollars that regurgitates phenomenal capital growth and amazing streams of income, it’d be a different story.

    But I’m sure there are many out there who managed to land themselves with “dud” investments and not make any money out of it, but rather just drown themselves with debt.

    I knew somebody who bought a property investment in Malaysia. A property with horrible location. With little to no capital growth at all and a tenant who doesn’t pay. I think as of today, he is still stuck with that one property, and trying to stay afloat.

  3. conrad palmer abdullah says:

    I would say I am richer because while the homeless guy is still sleeping on the street, I can have the luxury of my king size bed and the sauna, not mentioning the swimming pool and the lovely food waiting for me. I could do this for the rest of my life – of course in addition to that are the exotic holidays I can afford. I am definitely richer than him. I know you would say the bank would be after me. Well, after a long time I would get caught as I would not be able to pay the monthly payments after a while (I am paying that from the money I owed remember). By the time I am caught up with trouble, I would just declare myself bankrupt. the rest of the money would already be in my proxy’s account! And we are then in Barbados. All is well that ends well. Ha…ha…now what you got to say eh?

  4. I agree with you about accumulating wealth. The networth is the point.

    But I rather not to live like a homeless person; sleeping on a street, sneaking in a garbage for food.

  5. Nice article..

  6. @conrad palmer abdullah

    My goodness, you have got it all planned out eh? Haha 🙂

    By the way, if I’m not mistaken, the bankruptcy act states that all monies that were transferred out within the past two years and the courts deemed that that they were for the purpose of evasion, needs to be recovered back. For example, you know you’re going bankrupt soon, and you transfer a huge portion of wealth to your son, wife, or even put in under trust. Do correct me if I’m wrong though. My knowledge in this area is a bit vague.


    Exactly, net worth and how much income you derive from those assets are the main points.

  7. By the way, of course life as a homeless person is not as rosy as a person who owns a billion dollar asset.

    That’s why I used the word ceteris paribus (everything else remains constant) in the article.

    I was just merely comparing who’s richer by way of measuring net worth. So, using net worth as the yardstick, the homeless guy is way richer.

    Anyway, part 2 of “Who’s richer” will be out in a few days 🙂

  8. conrad palmer abdullah says:

    ‘Tabuxander’ got it right as for the law on this but the Bankruptcy ofice would not be able to find it either even if they turn heaven and earth around because if you get some cash out of your bank and give it to me your proxy, how am going to be traced to have got it from you. Of course don’t be daft by having your relatives as your proxy!
    This is only the grey area of the law that I am manipulating around. Of course it is not encouraged to manipulate around the law but this is also food for thought for those concerned to get the law improvised or added further.

  9. I believe they can. I can’t say for sure about Malaysia but in Australia, yes they can. They scrounge out every single transaction you have made for the past two years. As far as I know, banks, tax office, and “bankruptcy agents” do keep records. Especially for somebody who has a billion dollar worth of assets. Unless of course, you have a million bucks under your pillow, then it’s a different story.

    Big portions of money being transferred out will of course arouse suspicions. The same thing goes to smaller amounts of payments but with regularity.

    In fact, here in Australia, transaction amount of over $10,000 will trigger alarms and bells of the authority. Of course, there won’t be any blazing guns and sirens busting up your place an hour later, but they do monitor you.

    For example, if $500,000 was taken out from your account and transferred to your second account, then that might be fine. Transferring $500,000 to somebody else’s account (Of course not relatives. Son, wife as proxy were just examples), will obviously looks fishy. Not to mention if that fella did not report the $500,000 in his income tax return at the end of the year. Even if you claim the $500,000 to be as a prize or gift, obviously that would look weird.

    Whatever it is, I do agree, there are loopholes around the current law, and obviously there are still ways to get around the law, escaping oneself from the problem.

  10. Taking about that, my parents had been called by the income tax people when they bought a car with cash few years ago. They did some investigations where the money came from.

  11. If I’m not mistaken, a while back, somebody (can’t remember whether it was a friend of the family or a story that I read) was also called by the tax office when he paid cash for a piece of land.

  12. When you buy a house, even with a 100% mortgage, you are usually thought of as “owning” it. Of course the bank really owns most of it at first, but you get to use all of it every day. Therefore I would say that this “owner-in-development” is richer than the hobo with no debt. Even after the first month or two you will own a tiny fraction of it, and as time passes you own more and more of it as your equity increases. This is true even if the market value of the property does not rise.

    A more perverse situation is buying a car. As I understand it, some government workers in Malaysia can buy a car with nothing down, for a term of seven years. Clearly at the end of this period, the car will have minimal market value since cars depreciate rapidly. Nevertheless, the owner can still make use of its function as a vehicle of transport. (I currently own one that is 14 years old.) In the end the car buyer may have no more money (or market value) than the hobo, but still possesses an asset that the hobo lacks.

  13. Well, spot on.

    However, think of this situation. What if I bought a house that costs $1 million, fully financed by the bank. Then, due to the subprime crisis (or a recession for that matter), the value of the house has halved. On top of that, I’m having trouble meeting the mortgage repayments. The bank then repossesses the house but I still owe them $500 grand.

    My net worth = negative $500 grand (assuming I have no other assets)

    Hobo’s net worth = zero.

    At one time, this was what happened to Donald Trump (if I had read correctly). He owed his lenders hundreds of millions (or was it a few billions?). He was the one making reference to the hobo, saying that the hobo was richer than him.

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