Quote:
Originally Posted by Krash
Again, there is no right or wrong answer. There are many factors to consider. The “holier than thou” zero debt response isn’t necessarily the smart answer.
If you know what you’re doing, it’s much easier to turn $10m into $20m than it is to turn $5M into $20M.
So suddenly having $20 million worth of assets and $5 million worth of debt is pretty good.
Of course, the risk/reward ratio is not for everyone, and it’s all contingent upon making smart investments. Definitely stay away from FTX/SBF.
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But that’s how people build wealth.
I’m about to retire but I’m not paying down the small amount of debt I have. Instead, I’m aggressively investing money to make even more money.
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Another way to look at it...$10 mil in assets and $5 mil in debt. You make 10%. Your net worth goes up $1 Million. The guy who has $5 mil in assets and no debt makes 10%, his net worth goes up $500k.
By utilizing debt you are doubling your net worth and gains. Like you said...building wealth.
On the other hand, I would say that age has a lot to do with it....in your 20's, 30's, and early 40's, asset accumulation is the way to go. Once you hit late 40's and 50's I'd start the debt retirement phase, assuming you want to retire in your early to mid 50's.