Saturday, May 23, 2009

Aren't My Stocks Supposed to be Assets?

Robert Kiyosaki mentioned in his book "Rich Dad, Poor Dad" that assets put money into your pocket while liabilities take money out of your pocket.

It was with this in mind that I started to acquire more of these assets (e.g. stocks) instead of frivolous stuff like clothes, accessories, electronic devices and stuff.

These stocks I own have been paying me quarterly and yearly dividends. Thus, they have been putting money into my pocket over the years.

However, two stocks that I have recently declared "rights' issue. For the uninitiated, that basically means that the company is issuing me with more shares and I have to pay for them if I intend to exercise my "rights" or either forfeit them and see my shareholdings in the company diluted.

What an irony. These assets are now taking money out of my pocket! All the dividends that I have earned from them are like useless.

If they are so cash strapped, why did they even declare dividends in the first place over the years?

Didn't they foresee this coming? Why weren't they more prudent in calculating the amount of dividends that they were giving out over the years?

So now instead of owning assets, I am like owning two businesses which are asking me to pump in more money into them. I can't tell whether these are assets or liabilities just yet.

*Big Sigh*

2 comments:

  1. Hi,

    If they are issuing rights just to pay debt, then yes..they are taking money from you.

    But if they issuing rights for investments in business opportunities with the aim of increasing revenue...then no..since you might be owning less of a business but its a bigger business now..

    Just my thought

    SGDividends Team

    ReplyDelete
  2. Agreed. But my sense is that the money is just being used to shore up their cash position because they are unable to get more loans in today's climate.

    ReplyDelete

Popular Posts