Topic: Learn to use DEBT in a proper way to create asset - page 3. (Read 1274 times)

It helps especially to the readers who still doing the same, adjustment is needed if we wanted to allocate that money  for the betterment of our life,  just the same with what both of you are pointing,  using borrowed  money for the sake of luxurious lifestyle  will only bring burden to our finances, we should learn from that wrong perception and start thinking for the right  things to do, let the money works for you after borrowing either to create a small business or invest the money.

That's the sad reality of our time: borrowing just for luxury or not using it properly. That's why I made this topic to give awareness to other communities here on this forum platform of ours.

And so that we can also see the other assessments of others, what are their personal views that are not in what I have said, and other criticism, if there is any, there is no problem. The important thing is to work together and give us our opinions on each other.

that's true, in my environment there are many young people who always prioritize their lifestyle because they want to be seen by many people, and also currently whatever is available among young people must be luxurious because it can make them confident, maybe it's because of their high prestige. So in my environment it is not strange that many young people are willing to borrow money just to fulfill their desires while on the other hand they do not yet have a job with a steady income. There are also young people who demand that their parents buy them the newest items such as cellphones, vehicles or clothes, but they can't see the condition of their families so like it or not, as parents they have to please their children, so many parents also go into debt to fulfill their children's wishes. So, in my opinion, children like this don't have good thoughts, because they can't see the condition of their family, by forcing themselves to be stylish so that they look capable to other people so they apply for money loans.

If they are still young they should be able to think about the future, what about the future that they have prepared from an early age,  with their young age they should be able to work and have a clear income not only for their own good, but by having a job having a fixed income will ease the burden on parents and we can buy what we want without asking our parents or borrowing money. by having a job with a steady income they can save or invest for the future.

this is called keeping cashflow healthy and indeed a lot of rich people out there are using such means, not to mention credit card that give a lot of flexibility to delay payment as well as giving very low interest sometime almost none thats why rich people could take advantage of it for capital in their business so they easily have access to capital and in great amount at that if they have exclusive credit card.
its simply easy for them to buy some properties for the sake of growing their wealth its really different for those middle class or lower, having that access to capital is just a dream.
thats why its easy for the rich to build an asset, quite different if it was people that are not that rich building asset is a nightmare in the process.

Those people that does it lack of financial knowledge or education and that's why they're spending like that and don't understand that they're pulling themselves to the pit of debts. That's not how debts should be used because remember that if you can't it for cash like in gadgets, you can't afford it yet and much better to save money to pay it in full. And for the people that still takes loans to gamble, change your lives and don't be like that anymore. You'll have to change your mindset and don't gamble like that if you like to have a better life or be simple that don't take unusual loans.

Yes, I agree. The borrowed money is often used for bad things like gambling, borrowing money to gamble, buying gadgets, used for bad habits etc. This is common among those who are in debt, so they are even more in debt.
Being debt is not always bad, it's up to you how you use the money properly to grow the money you borrowed.

   It should also be known that not all assets will give you the  profit you require. Just like every other business and investment, you can also get losses from this asset, for instance gold, the price volatility of gold may fluctuate significantly over short period of time. This can make it difficult to predict its value and even make it a risky investment.  In the case of land anything can happen, government might seize or come take advantage of your property if you didn’t do a proper survey or have Certification of ownership. All this are possible scenario that can happen.
   In as much detail is good to invest borrowed money on assets rather than use to get liabilities, this will help you get back money to help clear your debt and also help boost your financial position to some extent. Buying phones and cars are not the deal. Rather look for something  that can help generate income times 2 of what you owe. Taking a loan for business is never a bad idea, after all every successful entrepreneur has been in the mercy of loan to push their business up. So never be ashamed to get loan to fund your business if you have to, see it as a way forward to get your business going again.

That other side of taking loan is most of the time the reason why there's hardship in life, most of those young adults who barowed money just to be in style are mostly the one who can't acheived financial stability, unlike with those wise and straight forward people who thinks of the present as an investment to have a better financial capability when they retire or in a much earlier stage of life.

They are taking those loans as part of their plans, either to have a good business or to invest the money on something that they understand well that will generate better amount of benefits.

You people think that Market always keep going up yes it goes but at some point when you atleast expecting the Market Will crash.
You need to realise that real estate prices are high becouse of DEBT it's not based on real reasons like...supply and demand ...but mostly pure speculation ...and If your House is 500k 600k or 1mil or just 100k it doesnt matter because what's missing is the real valuation measure.
So it all those prices been set for real estate when DEBT was high and still is high so the real estate are valued most confused ways nothing real behind the property valuations and in this situation the deleveraging will be happening so 30%-50% price crash can't be surprise.

The mistake most persons make is borrowing money for consumption or to buy a car which is considered a liability, because it will never appreciate it will always depreciate, but using borrowed money to invest in a business or to acquire an asset is good, because on like the liabilities that depreciates , assets will always be on the appreciating side, it might be slow but definitely it will appreciate, using money to acquire a land then maybe after 5years you feel like selling it , definitely you won't sell it for that money you bought the land, the will sell it more than that price, but for a car you won't be able to sell it more than the money you bought it, you will sell it lower than the money you bought it.

Borrowing money for investment/business then it would be a YES!
Borrowing money for trading, gambling, buying wants then its a big NO!

You should really be that sensible on the actions that you are making and dont make yourself that too impulsive when it comes to things on which it would really be just that right that you should
really be that focusing into something that will really be beneficial for you on long term and not really just that focusing or minding into short term ones.
If you do know on how to maximize DEBT or those loans then it wont really be that an issue. There are really just those people who cant think up well on what they should gonna do.

Promise, i had that bad experience on making use of DEBT in a wrong way that even upto now im still paying up some mortgages on something
that arent really generating some profits or income on which it does give out that kind of a little bit regrets.

that makes sense, this proves that people's perspectives are different, where people go into debt to do things that will generate profits in the long term, and can generate profits for them to obtain as well as to pay off debts that they take out loans to generate In my opinion, profits don't matter, because to produce something profitable of course there must be sacrifices, and people like this tend to have a good mindset, that's what I think.

Meanwhile, for people who take out loans to do things like you said, such as buying a vehicle or something else, maybe they don't think well, also people like this maybe they take out loans to buy things they shouldn't because they have prestige that cannot be lost and makes them want to be stylish but force the situation, and in the end this leads them to their own difficulties.

True, such an approach is really not recommended in the world of trading, one of the reasons that makes sense is because in trading you not only need skills and knowledge but also this activity involves mental and psychological calm and if you trade using money from borrowing then obviously at least there will definitely be a feeling of fear in yourself when using that money to trade which ultimately makes it difficult for you to be able to focus and have difficulty in terms of analysis because of the pressure and feelings like "I have to profit to pay off debt" of course it is something that you will definitely think about when your trading session has started, And usually when you experience distractions that make it difficult for your brain and mind to focus on making a decision in trading then obviously usually the decisions you make will also miss, meaning you make the wrong decision because of the psychological pressure of the borrowed money.

So in the world of trading do not try to borrow money as your trading capital because peace of mind is needed there, no matter how skillful you are, I have felt that the psychological distraction of borrowed money really makes me feel difficult to analyze and ultimately act carelessly.

What differentiates rich people's debt from poor people's debt is that rich people owe debt for something productive and prevent them from using a lot of their cash for goods or assets. They use their debt as much as possible to create new money for themselves.
However, poor people mostly owe money for unproductive things, such as vehicles or other assets, over a long period of time. They don't mind that they are using more of their money to pay down that unproductive debt. And that is what creates a lot of problems for them because they are not wise in using their debt.

The argument is true, business expect good returns, especially when the business is already established. They can multiply their investment, so even if it comes from a loan it won't be hard for them to repay it as it will be used for business that can generate income which they will be using to repay the loan together with the interest. After those loan terms, the money that they earned from it will be used as capital, and it will just be added to their growing business.

Sad but true, that even small loaners can get money without proper knowledge and without that opportunity to establish a business, the outcome will be a burden to those who borrowed that loan and the interest that they borrowed needed to be repaid, and it will be taken from their monthly salary if they fail to use it for business that will generate profits.

For real, people borrow money to start trading? What type of risk is that? No matter how professional and skillful you think you are in trading, I don't think it's a wise decision to borrow money and start your trading career. Although, it's a two edge sword and if you are lucky to succeed, you'll repay the debt and have your own money to start the journey but if otherwise, you suffer from desperation the embarrassment that associate with debt. However, the chances of failure outweigh that of success and that's why it is not an ideal.


Are you a risk taker? If one can answer this question honestly, then taking debt for investment wouldn't be a bad idea but believe me, I can't subscribe to such ideas because it doesn't align with my policy. We all know there's no such thing as a sure thing and guaranteed as far as investment is concerned.

Having all plan put in place doesn't mean automatic success after acquiring the debt. The only thing sure here is that, with the debt, you have the capital you need to kick off the business but in all circumstances, you should as well prepared for the possibility that the business might not succeed.

Actually, there's always risk involved in making profits and it doesn't even matter whether it's big or not but normally the higher your risk, the possibility of higher return and otherwise. However, it's all about knowing and balancing your goals.

Problem with this one is that not everyone can easily access loans or even afford to utilize debts even if they can make it because everyone isn't rich and have what it takes to be risk takers and they can't afford to even do that too because it's going to be significant money for them and they might have a hard time using it in a business or something that might improve their financial standing. Plus, I do think that we're likely to see debts get it's full utilization if they're a certain amount, a measly 100k loan won't really net you lots of returns and that's why big businesses are the only ones that's successful at doing this debt utilization because they're getting bigger returns since they can borrow more money than most individuals.

only if you have an asset before hand, or salary that is sufficient, the bank aren't gonna go around giving some money to stranger, you need to build up trust first maybe credit score for loan then you can get that loan to start out with such strategy, even so in renting your property it also requires proper planning also need to remember that the property need mantaining so its some more money to shell out also with taxes.
this indeed could work but really there must be more to it than just renting some spaces, and you will magically get some property in your hand as the time goes.
but i would argue that if someone has enough asset to cover for the failure of the strategy, they should try it, there's nothing wrong in attempting to get some good property with just loan, even more so when we have so much money that we don't know how to take advantage of but in the other hand we also need to mantain cashflow.

I think taking out a loan to trade is not a good thing, because even though trading can generate profits, it's not guaranteed, right? because in my opinion even someone who is a professional in trading will definitely experience wrong predictions, it is impossible for them to always be accurate in predicting, because in my opinion even though trading requires extensive knowledge, I also think luck plays a role, so even if they have sufficient knowledge I don't think they are knowledgeable in trading, which doesn't guarantee they will always make a profit.

I think that taking out a loan to start a business or business is less risky, because if we have good skills in managing it, it is likely that it will be profitable, and don't try to be successful, just start a business to make a profit first, because success will come by itself later if someone wants to try and work hard, this is also the difference with trading, even though we try as hard as we can, I don't think it guarantees that we will get easy profits. but I don't know exactly how, I just assume what I think.

Plus if you take a debt, make sure that you can still pay it in case your plan to make money from that debt fails, causing the penalty, charges, and fees could drain up your wallet. Borrowing money just to buy unnecessary things would be a bad move, some think that they are taking advantage of the system like payment for 3 months, the thing is you would still need to budget your money as you would less the debt to your salary.

Borrowing money for an investment is a good idea but for sure you need to make the money grow to return the good. You need to plan it as there is such long-term investment to reach ROI and get profits like we can say Bitcoin, if you invest in the current market for sure you would have to wait for another bull run to occur, or else you would be in deep debt. For health and emergency, it's understandable, but you need to make sure you have emergency funds to sustain your needs. The important thing is the person who's gonna take a loan has a stable income.