Quote:
Originally Posted by DocHorton
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. |
Yes, this is true, assuming there is zero cost to borrowing. Please let me know where I can get this rate.
Also, if the reverse happens, and investments go down -- like most stock and bond investments this year -- you lose twice as much (plus the interest on the borrowings unless someone lends to you for free).
