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  • Putting things on the house.

    Theoretical.

    Should society allow other things to be put on a house loan at low interest rates?

    Case :You take out debt to buy a house.

    Makes sense, houses are so expensive, saving for one isn't really an option.

    And society looks the other way. "Sure, lets have low interest rate loans for this very essential need, shelter".

    But what about allowing low interest rate loans for luxuries or non essential trash.

    "let's put it on the house".

    A backdoor "buy now pay later" scheme in effect.

    So easy for the weak minded to splurge on a whim.

    It works for the banks, but does it work for a responsible economy?

    Shouldn't these luxury items be at a much higher interest rate, and be a totally different loan, not secured against an essential good?

    Hmm, one for the financial purists to ponder.

    And don't get me started about the immorality of revolving credit accounts.


  • #2
    Revolving credit is the reason why we didn't go into recession when the world closed down in 2020 .

    Now that there's a credit squeeze in play, there may eventually be a recession...go figure?

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    • #3
      I should add, I borrow against my share portfolio @~1.5% interest only due once per year.

      The New York stock exchange isn't as stable as NZ property, however if you have a large trading account balance of 1mil , you only need to borrow 20% or 200k per year.

      I can margin up to 70% but that's too risky, 5 to 20% is plenty for me depending how my investments go.

      So in NZ we put it on the house, in The US the wealthy (*me) put it on the US stock market..

      Debt

      Always is always will be apart of the economy


      *Note: I have credit lines on all my real estate(some haven't been used since I set them up years ago)
      Last edited by Jeffa; 14-12-2021, 09:49 AM.

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      • #4
        Oh yup.
        I know exactly how the Americans work.

        Here's a question for you.

        While watching a documentary about the Great Stock market crash of 1929...

        They had an interview with a wealthy socialite, she was worth about a million dollars.
        It was her inheritance.
        She lost it all in the crash. Said she was now penniless, not a thing to her name.

        Now if the market only dipped 25% approx, why didn't she still have 750 K left?
        Last edited by McDuck; 14-12-2021, 05:14 PM.

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        • #5
          I'm not sure, however it took 3 years to fall 90%.

          So plenty of time to close her positions, buy some put options, short everything that moves.

          Maybe print a few trillion dollars/I don't know how advanced they were back then, My grand ma was still living in huts with no floor's... probably complaining about getting the jab for the Spanish flu .

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          • #6
            Originally posted by Jeffa View Post
            I should add, I borrow against my share portfolio @~1.5% interest only due once per year.

            The New York stock exchange isn't as stable as NZ property, however if you have a large trading account balance of 1mil , you only need to borrow 20% or 200k per year.

            I can margin up to 70% but that's too risky, 5 to 20% is plenty for me depending how my investments go.

            So in NZ we put it on the house, in The US the wealthy (*me) put it on the US stock market..

            Debt

            Always is always will be apart of the economy


            *Note: I have credit lines on all my real estate(some haven't been used since I set them up years ago)
            So how does this work?

            you get a return each year on your stock, hopefully above 20% return, you borrow say 200k max and that is your personal spending money?

            Why would you just not live off the return? What is the benefit of borrowing at 1.5%.

            have I missed something here!
            "DEBT BECOMES IRRELEVANT WITH INFLATION".

            Comment


            • #7
              Originally posted by Frezzinghot View Post
              So how does this work?
              you get a return each year on your stock, hopefully above 20% return, you borrow say 200k max and that is your personal spending money?
              Why would you just not live off the return? What is the benefit of borrowing at 1.5%.
              have I missed something here!
              The idea is to not sell your assets unless something changes in the company structure.

              A blue chip company is as good as a blue chip property.

              If you're making 15/20% return, 1.5% is the holding costs plus fees.

              I'm a mere millionaire/Most Billionaire's borrow against there portfolio.

              ​​​​​​​https://www.forbes.com/sites/johnhya...g-their-stock/

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              • #8
                Originally posted by Jeffa View Post
                The idea is to not sell your assets unless something changes in the company structure.

                A blue chip company is as good as a blue chip property.

                If you're making 15/20% return, 1.5% is the holding costs plus fees.

                I'm a mere millionaire/Most Billionaire's borrow against there portfolio.

                https://www.forbes.com/sites/johnhya...g-their-stock/
                Oh yes I see, slightly different than property but similar
                "DEBT BECOMES IRRELEVANT WITH INFLATION".

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                • #9
                  There seems to be a myth with property investors and we'll known media commentators who say you can't borrow against your shares.

                  You can, just not using the NZ bank's, you have to use the US investment banks and brokerage accounts.

                  Even Adrian Orr said it at a press conference, but the media didn't understand what he was talking about.

                  There's a big wide world outside little NZ.

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