When a rich person says debt is good, they're speaking a language you don't understand.

[Secure Da Bag]

Help me make it make sense…

Rich person sells stock to live off of then pays taxes on the capital gains? Rinse, wash, repeat….. how is this a win?

You got rich people borrowing against their stock at a very low interest rate. Then they flip that borrowed money into other investments which make them more money.

Even the ones that sell stock get more stock from the company at the end of the year anyway.

EDIT: And I forget dividends and DRIP. Those help as well.

 

[Ezekiel 25:17]

A house isn’t a good investment if you’re looking at it solely as an investment. It’s too volatile in this era. Even people that flip houses take on a lot of risk and the longer they hold it, the more money they’re losing which eats into their profit when they do sell it and sometime they can even take a loss.

It's an investment for your retirement. You tryna pay rent in your 70s?

 

[O³ (O cubed)]

Elon Musk is a few tweets away from bankruptcy.

 

[King Poetic]

Im a working poor nikka

So that whole debt is good talk is way beyond my pay grade

 

[Sugarbush]

They shouldn't be paying taxes if they aren't selling stock. Stock/investments held are taxed as ordinary income. So your wealth can grow while still being taxed at a lower rate than what your net worth is. Said person can leverage that debt into other investments, to grow their wealth even more, while not having to "pay for it" unless they sell.

The more wealth you have, they of your money you need to spend.

So they live off of leveraged debt? Man that’d stress me DF out, but I hate debt

 

[Ethnic Vagina Finder]

You got rich people borrowing against their stock at a very low interest rate. Then they flip that borrowed money into other investments which make them more money.

Even the ones that sell stock get more stock from the company at the end of the year anyway.

EDIT: And I forget dividends and DRIP. Those help as well.

they do the same thing to buy properties....

It's also how Musk bought Twitter. He borrowed the money using his Tesla stock as leverage. Then he purposely decreased the value and used the losses to offset future taxes.

 

[Ethnic Vagina Finder]

So they live off of leveraged debt? Man that’d stress me DF out, but I hate debt

But here's the beauty of it. They're living off your money. When you deposit money into your bank account, you're giving the bank an interest free loan, when they use to give loans to rich people. And it's why they make it hard for everyone else to get a loan.

 

[Ethnic Vagina Finder]

It's an investment for your retirement. You tryna pay rent in your 70s?

I mean it's an asset

But in todays market, the value can go up but so much and someone who bought a house for $750,000 is expecting the value to to be what in 30 years?
So you can look it it as a piggy bank. In 30 years it may be worth the same or a little less, but you could take out a loan against it and buy another asset or you may need the money. Who knows.

 

[Strapped]

Debt is only profitable for corporations & rich people

 

[Sugarbush]

But here's the beauty of it. They're living off your money. When you deposit money into your bank account, you're giving the bank an interest free loan, when they use to give loans to rich people. And it's why they make it hard for everyone else to get a loan.

So it would only make sense for regular folk to leverage debt if their investments grew faster than what they would pay the bank in interest?

 

[Jazzy B.]

When rich people say debt is good they mean loans used for investments.

The return on the investment is meant to provide more than what was taken out including the interest rate.

 

[Ezekiel 25:17]

I mean it's an asset

But in todays market, the value can go up but so much and someone who bought a house for $750,000 is expecting the value to to be what in 30 years?
So you can look it it as a piggy bank. In 30 years it may be worth the same or a little less, but you could take out a loan against it and buy another asset or you may need the money. Who knows.

Unless the neighborhood goes to shyt, the endgoal is staying in that house the rest of your life. At some point you stop selling.

 

[Secure Da Bag]

An explanation of how rich people don't pay taxes.

 

[beenz]

Debt is good if it's an appreciating asset. A house, land, a business, etc.

yup. the only debt I carry is on my house which is worth 350K. and I only owe 173K on it.

of course, I'd rather have that mortgage gone, but at 3%,, it's nothing to lose sleep over.