Topic: A lot wealthy people not smart they just use debt - page 7. (Read 1271 times)

Everytime I here or read something like good and bad debt reminds me of Robert Kiyosaki that is part of his rich dad poor dad book I think. 😅 Based on his like how rich people use debt to make money withput even stressing out tax but that only works on good debt because bad debt is more on liability if I am not mistaken.

Creating wealth using debt is not as easy as one might think it is because it requires proper risk management and perfect financial management techniques to have a very high success rate with what you do. Those who take loans and invest the money in businesses have experience with these things and someone entering a market as a newbie can't take the same level of risk because they won't be able to manage it properly and that can make them fall instead of rising.

It is also important to understand that a loan taken must not exceed the profit the business you are about to start is going to make so that when the time comes to repay the loan, your business might not have generated enough revenue for you to make that happen and that can get you and your business in trouble because you wouldn't want to liquidate your business to repay the loan because that would make everything you have done so far useless.

There's no way wealthy people aren't smart, if you think you can grow your money from investing, you can be scammed and if you choose low risk investment like ETF, blue chip stock, etc will not make your wealth grow since the profit can surpass inflation rate.

Haven't you thought why wealthy people choose to use debt when they can just use their money? they know what they do and they have knowledge before choosing it, which mean they're smart.

If it works, then doesn't it make them smart? Being in debt is not a bad thing as long as you are able to pay it on time without missing any deadlines. Rich people are taking bank loans because they want their money to revolve on their other businesses.  It also depends on where would borrowed money will be used; if it is with things having no ROI in the long run then that would be the time it would be a wrong thing to do but going back to the context, rich people are using debt to create a new business and to lt the profit pay for the interest which is really smart. Risk will be there of course but they won't be rich for nothing even if inheritance would be a factor. That's on them whether to let things fall apart.

i'm too complicated to read your long article, but i will say that the way rich people use debt is different because they use debt to make money, while poor people use debt to pay off debts or buy things that are not important.  rich people try their best to use their debt to make more money and prevent them from using too much cash for their needs.  indeed, it seems like a careless thing, but if you look at it from an economic perspective, it actually benefits them because from these debts they can use them for productive things and that can earn them more money.

OP....before I even comment on your topic, may I suggest you not create threads with enormous Great-Text-Wall-of-China posts?  Just scrolling through yours, I immediately don't want to read it as I'm 98% sure you're going to be using far more words than are necessary to get your point across.  Thank you in advance.

*10 minutes later*

And now that I have donned my forum muck boots and waded through the aforementioned wordspray wall, I'm having a damn hard time trying to find the importance of your concern, much less all of the writing you've dedicated to it.  Do you live in a first-world country?  This isn't an insult if you don't but if you do, your ability to do things ranging from buying a house to buying stocks on margin to getting a credit card depends on you having some history of debt repayment.  It's a bullshit system IMO, but that's the way it is. 

Wealthy people?  Oh hell yes they use debt.  If you're smart enough to find an investment that will pay you 15% a year for instance, it makes complete sense to borrow money at a much lower rate to finance the purchase of that investment.  That's smart use of debt--and it's why wealthy folks tend to remain wealthy if they've held onto money for any length of time.

The rest of the plebs?  The only way I can put this is that debt is like a loaded crack pipe that all of them seem to want to partake in a-smokin'.  Credit cards, student loans, car loans, mortgages on houses there's no chance in hell of paying off.  Et cetera, et cetera.  And OP?  Please go back to my first paragraph and read it again.

I don't agree with you that many people are using this loopholes to become wealthy, if you said a few people, that would had made more sense because only a few people are using it. Others have tired but aren't successful at it because although this is a great way to hack the system but if you fail you'll be in debit. Using borrowed money to finances your business or investment is a skill only the 1% of the world can use to become rich. If you don't have financial education don't borrow money or use debt because you'll only add to the debit that you already owe and your chances of defeating poverty reduces. There are actually people that made it because of their smartness and that's because of the quality they gained because they worked for it.

Borrowing has alot of interest attached to it and there's a feeling that comes with borrowed money that you can't use them freely as you'll use your spare money. If you had a borrowed money in an investment, you won't waste time to exit with any profit that you can grab because you know you can't risk losing that money unlike when you are in an investment with your spare money. You won't mind to continue hodling knowing if the money get lost, it won't affect you because it's a spare money and those are the type of money that's perfect for using when investing in Bitcoin and any other businesses unless you have the financial education to take advantage of borrowed money.

Maybe if you could do a survey, you will find those rich people that are still free of debts. With that said, their numbers can only be small because I also notice that many rich people do always have a debt. Sometimes poor people are better than them in terms of it because poor people are already poor and don't want to increase their headaches anymore by having a debt.

The only good thing about rich people who have a debt is they have businesses, investments and others... This is where they use the money that they borrow. I think most rich people who does this are smart and strategic, so they also know how or when to stop once they think things are not running well anymore.

I don't think that's smart enough for the poor to jump into loans in the name of copycating what the wealthy people do. No any one, whether rich or poor should go that route. Secondly, anyone taking loan from either an individual or government supported loans, should first evaluate what they intended to do with the debt their incurring and also sought for how they can recover their loaned money before the deadline they must have given.

Aside from other life threatening cases that may warrant people to borrow money solve those issues alias safe lives, it is discouraged by wise men not to go into loans that can be wasted easily rather than taking loans for the sake of productivities.

You can't classify using a loan to solve your personal needs as the wrong way of managing debt. We all know that most people who usually use loans to solve their personal needs do that. because they don't have any other way or solution for their problem, even though they will know that at the end of the day it will be a great liability for them to pay back. But some loans or debts are collected due to emergencies, and there is no other solution, so they have to do that in order to feel free from it.
 
Furthermore, it is not that the poor cannot collect debt to invest in others to make a benefit, but they don't usually have the chance to do that due to their financial status because, without collateral, no one will give you a loan of a higher amount that will be enough for you as a poor man to start up a new business. That is why loans became a liability to the poor and, at the same time, sweet for the rich, so don't see the fault of the poor, who always struggle with depth.

That is the behavior of a certain group does not represent the whole of what is going on in the financial system, so the further question is where are the people who are debt-free and still rich?

But in this situation, I feel that the behavior of reinvesting in debt and still succeeding is like the way a balloon is filled. Things will explode until they can't balance their operations, but nonetheless, everything they reflect gives some perspective on the potential for major risks that haven't happened yet.

It takes a different level of confidence to get into debt, and this kind of confidence is usually not common among people who are not rich or people who have not come across a certain amount of money in their lives before. Also many poor people are not capable of getting into the good debts because they do not have the collateral for this sort of loans from banks or individuals, because there are even people that would not lend you some amount of money that they know you cannot pay back. Before you can get some good loans you need to have some good collateral, and rich people have this, so they can easily take these loans.

This is where the difference is. The rich is already exposed to risk and he goes ahead to take more risk by running himself into repayable debt, such debt that the poor never venture into. The poor doesn't want a "stigma" or name calling of being indebted and so he finds it difficult to get a loan to run a business but the rich doesn't look at that, he approaches the bank and sign off a loan contract to establish his business or refurbish it after which interest is being charged on a long term and he will have his business running with the sum of the total money that the poor has deposited in the bank. So it is clear the rich are there for the risk that the poor is scared of.

This is very true for many cases I have seen and I must attest to the fact that the wealthy remain so, because they know how to increase their value and thus have maintained a good income record overtime, in that they now have access to loans and good credit schemes that affords them enough to reinvest, seeing they have clear insight on how the returns would be.

Debt is made available to many who have knowledge of the terms and conditions and is responsible enough to abide by it in such a way that the creditors have faith in their timely returns.

different people have different approach but the fact that with good credit score give you access to capital through debt means the rich people with good credit score got the advantage and yes there are many people living out of the debt alone it reminds of robert kiyosaki he kept talking about his big debt which amounts to $1.2 billion and said if he go bust then the bank also go bust and its not his problem which kinda make sense if you got big debt amounts to billions you always got room to negotiate with the bank since its also the banks problem but if its lets say just $50k you gonna be chased to oblivion thats just how the world works.
don't be surprised when you see people with high debts actually could afford living luxurious life, the important point here that you need to take note is that as long as you can pay the debt regardless whether its coming from your pocket or from another loan then bank will see it as a normal healthy loan i assume thats why many rich people exploit such loophole.
though i'm pretty sure there are other rich people that also try so hard to stay away from loan at the cost of them never have that good credit score.

As far as I'm concerned rich people have a lot of money they don't have debt for more ambitions and they don't have a problem paying off the debt. But for the poor the debt is like a burden they take the loan after the danger so they try to get out of there by paying it as soon as possible. The poor are afraid to take risks so they cannot build much wealth. Rich people build wealth because they take risks.

There is something that you are supposed to understand for anything that I have to do with investment you need to be careful to understand it many people today who is rich can be a debtor based on they have ambition and they need to execute it with a risk measure so before you invest you may or you may not make a proper research towards that investment but I know carefully that investment have to deal with proper research so on my own understanding you have to take a risk to make a profit because a risk taker is liable to be rich

If wealthy people use debt to get rich and richer, isn't this kind of like the secret to being wealthy? Poor people should simply follow in that footsteps too. They should go the bank and take out a loan, you it to start up a small business and stay committed to it and when the business booms, they can be able to pay off their debts with the interest. They don't have to take a large amount out as loan initially so that they are not under too much pressure, they should start with something small and build up from there. This is one way that they can build wealth.

Robert Kiyosaki was a US citizen. I know he talked about how he used debt to become rich because he used his debts to purchase assets and not liabilities. The reason why I had to mention the country where this man comes from is because if he had come from another country, maybe an underdeveloped country, he probably would not have archived what he did archive with his debts. 

Bro, things work differently around the world. The traditions, laws, and opportunities in the east may not be the same in the west and the same in the north, etc.The principle of one man cannot work for everyone. Debt is not favorable for everyone. 

Debts (loaned money) are also used for other important stuffs, but apart from assets, there are other life issues that make people take out loans, which is very important stuff for them too. 

It's a fact that you can actually take a loan to make an investment or purchase an asset but still don't get the expected returns due to the circumstances of the bad investment. For example, people are advised not to take out loans and invest in Bitcoin.

Debt has never been a bad thing it's just used wrongly by most common folks, have you ever wondered why bank gladly borrow money to business men even if they are owing?, that's because they make money of the little percent they take as interest.

If you take loan to invest in a business then you have made a good use of a loan and if you use it for personal needs like buying food or living luxury then you just created a mess for yourself to solve later.