Comments on: Want To Get Rich? Get Into Debt! http://www.johnchow.com/want-to-get-rich-get-into-debt/ The Miscellaneous Ramblings of a Dot Com Mogul Fri, 05 Dec 2008 08:02:08 +0000 http://wordpress.org/?v=2.6.5 By: kim http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-30048 kim Mon, 29 Jan 2007 12:57:34 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-30048 i just a student , university student . but i ma very very poor , i hope i can get rich , i try to buy bond , but in the end fail . even bond also cannot give me good investment , so i guess , if anyone like me here dont know how to manage money , then we better save money in the saving account . safe for your whole life , rich or not is not reallyu important , at least you are safe and can live a better life without worrying you will went broke. right ? we cannot playing this kind of gambling games all the times . need to be stable . i just a student , university student . but i ma very very poor , i hope i can get rich , i try to buy bond , but in the end fail . even bond also cannot give me good investment , so i guess , if anyone like me here dont know how to manage money , then we better save money in the saving account . safe for your whole life , rich or not is not reallyu important , at least you are safe and can live a better life without worrying you will went broke.
right ?
we cannot playing this kind of gambling games all the times . need to be stable .

]]> By: JohnChow.com - A Review | The Money Tortoise http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-19857 JohnChow.com - A Review | The Money Tortoise Wed, 03 Jan 2007 01:35:45 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-19857 [...] However, he’s not totally against debt. If fact, if you’re using the most cost-effective and tax-efficient credit available to you, John recommends using leverage to build wealth faster. In his post titled “Want To Get Rich? Get Into Debt!“, John promotes the concept of using a home equity loan to increase your investment base. Where I take issue with this approach, and I’ve seen and heard this one elsewhere before, is that its success is based on your ability to achieve an investment return in excess of your debt service costs. And I personally don’t think this is a risk many people should take, because as John correctly points out, it can magnify your gains if it works, but the converse holds true: it will magnify your losses if it doesn’t work. [...] [...] However, he’s not totally against debt. If fact, if you’re using the most cost-effective and tax-efficient credit available to you, John recommends using leverage to build wealth faster. In his post titled “Want To Get Rich? Get Into Debt!“, John promotes the concept of using a home equity loan to increase your investment base. Where I take issue with this approach, and I’ve seen and heard this one elsewhere before, is that its success is based on your ability to achieve an investment return in excess of your debt service costs. And I personally don’t think this is a risk many people should take, because as John correctly points out, it can magnify your gains if it works, but the converse holds true: it will magnify your losses if it doesn’t work. [...]

]]> By: Brad http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-11369 Brad Wed, 06 Dec 2006 01:01:58 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-11369 What about using a line of credit to purchase the new manual life Income Plus. You are guaranteed to not lose your principle, you can lock in your gains every 3 years, and you get bonus payments if you dont withdraw any income for a time. Lets say 10 years. It is tax free growth and insured in case of death. From what I know so far you can deduct the interest as interest costs on an investment. I understand the gains will not be as much, but you will never lose your house or your marriage. What about using a line of credit to purchase the new manual life Income Plus.

You are guaranteed to not lose your principle, you can lock in your gains every 3 years, and you get bonus payments if you dont withdraw any income for a time. Lets say 10 years. It is tax free growth and insured in case of death. From what I know so far you can deduct the interest as interest costs on an investment.

I understand the gains will not be as much, but you will never lose your house or your marriage.

]]> By: Richman http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-9803 Richman Tue, 28 Nov 2006 15:23:24 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-9803 John, As a Certified Financial Planner I agree with this concept and use it with clients in many applications. The trick is to understand that the concept is risky enough and you don't need to go overboard with the investment risk as well. Build a portfolio that will generate 8 - 10% over time and this is a great retirment savings vehicle. I too attend Camp Abundance John,

As a Certified Financial Planner I agree with this concept and use it with clients in many applications. The trick is to understand that the concept is risky enough and you don’t need to go overboard with the investment risk as well. Build a portfolio that will generate 8 - 10% over time and this is a great retirment savings vehicle.

I too attend Camp Abundance

]]> By: prlinkbiz http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-9410 prlinkbiz Sun, 26 Nov 2006 06:44:23 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-9410 John- Ken is probably referring to, among other things, this discussion over at the Investor Geeks: http://www.investorgeeks.com/articles/2006/11/16/lets-change-our-goals-around/ and then this one as well: http://www.investorgeeks.com/articles/2006/11/22/some-thoughts-on-steves-article-and-personal-finance/ Personal finanace bloggers, like people tend to be either scarcity or abundance minded. The mindset is everything. "Whether you think you can or can't, either way your're right." For the record, I am of the abundance camp (Camp Abundance), and am glad to see your post about leverage used properly! John- Ken is probably referring to, among other things, this discussion over at the Investor Geeks:
http://www.investorgeeks.com/articles/2006/11/16/lets-change-our-goals-around/
and then this one as well:
http://www.investorgeeks.com/articles/2006/11/22/some-thoughts-on-steves-article-and-personal-finance/

Personal finanace bloggers, like people tend to be either scarcity or abundance minded. The mindset is everything. “Whether you think you can or can’t, either way your’re right.”

For the record, I am of the abundance camp (Camp Abundance), and am glad to see your post about leverage used properly!

]]> By: Kenric http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-9260 Kenric Sat, 25 Nov 2006 07:45:30 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-9260 John, It's very difficult to convince people about the power of leverage and debt. I've found that it's almost like arguing religions with other people. You will never convince them that certain debt is good. John,

It’s very difficult to convince people about the power of leverage and debt. I’ve found that it’s almost like arguing religions with other people. You will never convince them that certain debt is good.

]]> By: Silicon Valley Blog About Money, Finance, Geek Culture and Cyberspace http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-5903 Silicon Valley Blog About Money, Finance, Geek Culture and Cyberspace Wed, 01 Nov 2006 16:11:34 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-5903 [...] Some people use good debt as a financial strategy for getting rich — what is otherwise known as getting rich with OPM (other people’s money) or using leverage. I’d say don’t do this unless you really know what you’re doing. [...] [...] Some people use good debt as a financial strategy for getting rich — what is otherwise known as getting rich with OPM (other people’s money) or using leverage. I’d say don’t do this unless you really know what you’re doing. [...]

]]> By: StingyFinance http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-5602 StingyFinance Sun, 29 Oct 2006 14:09:29 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-5602 If you're investing for the long term and buying stable dividend paying investments (Canadian) there is limited risk in using your home equity line of credit to invest. Not only do you get the tax break from your interest payments, you get the tax break from being invested in Canadian dividends. Just some food for thought. StingyFinance If you’re investing for the long term and buying stable dividend paying investments (Canadian) there is limited risk in using your home equity line of credit to invest. Not only do you get the tax break from your interest payments, you get the tax break from being invested in Canadian dividends.

Just some food for thought.

StingyFinance

]]> By: Stephen http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-4738 Stephen Tue, 17 Oct 2006 02:35:31 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-4738 John: Some of those borrowing 90% to buy a house are indeed speculating (just look at all the frantic investors in the US with ARMs who are now looking down the barrel of a gun as the interest rates creep up). What's more, that's not a purchase on margin -- you're only risking the accumulated equity in the invested asset. What you're proposing is taking secure equity from one investment and risking it on a much more volatile and risky second investment. You're multiplying your reward, but also your risk by an equal amount. One thing I would never counsel anybody to do is use equity in a principal residence to finance an investment in a tradable security. Have a look at Benjamin Graham's book, "The Intelligent Investor". Whether you are investing for growth or more conservatively, your first priority should still be protecting your principal. Warren Buffett got rich following the same approach :) John: Some of those borrowing 90% to buy a house are indeed speculating (just look at all the frantic investors in the US with ARMs who are now looking down the barrel of a gun as the interest rates creep up).

What’s more, that’s not a purchase on margin — you’re only risking the accumulated equity in the invested asset. What you’re proposing is taking secure equity from one investment and risking it on a much more volatile and risky second investment. You’re multiplying your reward, but also your risk by an equal amount.

One thing I would never counsel anybody to do is use equity in a principal residence to finance an investment in a tradable security.

Have a look at Benjamin Graham’s book, “The Intelligent Investor”. Whether you are investing for growth or more conservatively, your first priority should still be protecting your principal.

Warren Buffett got rich following the same approach :)

]]> By: Robert McIntosh http://www.johnchow.com/want-to-get-rich-get-into-debt/#comment-4381 Robert McIntosh Tue, 10 Oct 2006 18:48:42 +0000 http://www.johnchow.com/index.php/want-to-get-rich-get-into-debt/#comment-4381 One man's investment is another man's gamble. In other words just because you think it is gambling doesn't mean it is for everyone else. Lotteries are legalized gambling, any other sort of investment is only gambling if you do not know what you are doing. Sure, some big rollers have been wiped out, but you know what? They know how to make money and therefore being wiped out isn't as bad for them because they can get it back. John is right, the only way to get money more quickly than saving it is to leverage someone elses money. He is also right on with the points of buying a house. Unless you are paying cash, then you are leveraging someone elses money. One man’s investment is another man’s gamble.

In other words just because you think it is gambling doesn’t mean it is for everyone else. Lotteries are legalized gambling, any other sort of investment is only gambling if you do not know what you are doing.

Sure, some big rollers have been wiped out, but you know what? They know how to make money and therefore being wiped out isn’t as bad for them because they can get it back.

John is right, the only way to get money more quickly than saving it is to leverage someone elses money. He is also right on with the points of buying a house. Unless you are paying cash, then you are leveraging someone elses money.

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