They cant borrow your money to do business ever if they dont have something as a collateral and when they fail if its not a fraud 99% of the time they have asset to pay off the bank loan.
Because they borrow against their stock portfolios so they never have to actually spend their own money to "buy" things. They would much rather get a handout from the bank with ~1% interest (which is tax-deductible), and the loan never has to be repaid because the stocks are collateral (known as a Securities Backed Line of Credit). This is also why they take company stock instead of a salary that would be taxed at 37%. Stock isn't taxed until it's sold, and if you're never selling and always borrowing, you avoid taxes. "Buy, Borrow, Die". Simple.
Also, the amounts they take usually out are pennies of their total net worth. Normal people go beyond their net worth when they borrow. And even if you as a billionaire couldn't pay, because your company's value dropped for example, it's not your problem anyways. It's your banks problem for not taking doing the risk management calculations
@Ryan Swaggert How does that saying go? "If you owe the bank $100 that's your problem but if you owe the bank $100 million dollars that's the bank's problem"
You work for 40yrs to have $700k in your retirement, meanwhile some people are putting just $10K in crypto from just few months ago and now they are multimillionaires..
@mikkycole3213I will personally introduce you to my account manager Anna S Wilson of UCLA Anderson financial Institute, her trading methods are working for me
If I was a cash rich billionaire, like the members of the Saudi Kingdom or some hedge fund managers, I doubt I’d bother taking out debt. But those tech CEOs aren’t cash rich, so it makes sense why they would.
"cash rich" yeah when your cousin literally owns the entire petrol industry of a "country" (a region that there's people and they are the shaque, dunno how its written) they just have so much USD and no where to put it, the best think they can do is literally spend it like crazy.
Quite interesting I had no idea why billionaires take huge debts. But I am quite skeptical about Twitter I think it's a human problem rather than an engineering problem. But I don't underestimate elon
@@RandomShowerThoughts with what he has achieved with tesla and spacex. I think you should reconsider your opinion. Being a first mover(with such crazy ideas) and make both companies successful is phenomenal.
@@shivendrasingh4631 and what exactly has Tesla reinnovated? Electric cars have been around long before elon, he hasn’t delivered half of what he’s committed. Look at that guy dancing in a robot 🤣
Because 99% of the time, they AREN'T billionaires. 99% of them dont have ANYWHERE near even a billion dollars. They dont have money. They own stocks, usually in companies they founded or bought outright. Their net worth is not a measure of how much money they have, but how much money thry WOULD have IF they sold all their shares at the current market rate. Which, if they begin dumping massive amounts of stock in their own company, the stock price will plunge and they will receive FAR less back than they expected to.
Very few people have all their net worth in cash and even if they did the billionaires have them in cash equivalent accounts earning interest. Most Billionaires Net Worth comes from the value of their real estate , stocks , ownership of companies, luxury assets. They can sell a few billion and liquidate that billion but they prefer to keep it in other assets that appreciate over time to protect their wealth from inflation. Bill Gates has about 10 billion in cash he now owns 1 percent of microsoft he sold nearly all his microsoft stock not to put his money in the bank but to put in various others investments instead of losing value by sitting in the bank which they bank uses peoples money to give out loans earn ten percent as well as they invest in other companies through the stock market. But having some cash is good for Day to Day expenses , emergencies , seizing opportunities that require access to large amounts of cash at once
Rich people borrow against the value of their assets. That way, they don't need to sell their assets and incur capital gains, and their debts will be eroded over time with inflation induced debt destruction.
Yep, and if they really wanted to they could sell their assets or rent them out over time to pay off their debt. Normal people don't have this luxury and are forced to build a nest egg for themselves. This is why I think more companies should give their employees the ability to buy the companies stock at a discounted rate or part of a 401k plan. Perhaps having better policies for rainy day funs would help too. A couple examples of a rainy day funds are: long-term disability insurance, and contracts that ensure an employee receives unemployment and health care for certain amount of time.
I came here to learn how to trade after listening to a guy on radio talk about the importance of investing and how he made $460,000 in 4 months from $160k. Somehow this video has helped shed light on some things, but I'm confused, I'm a newbie and I'm open to ideas.
@Jones David It is possible to produce superior performance provided you do something different from the majority. However, most of us tend to pay more attention to the shiniest position in the market to the cost of proper diversification.
100% agreed, I didn't really understand money and investing until my late 20's and even now have friends who are only now in their mid 30's starting to think about it when not to long ago they'd say who cares about stock stuff and taxes.
It's a club. Banks need billionaires to take out big loans. Billionaires need banks to get loans for share buybacks, M&As et al. They're just facilitating money flow.
Love your channel. As you said, debt is actually not bad. Just like billionaires, corporations use debt for something called a “tax shield” where their interest payments are tax free and thus saves the corporation hundreds of million dollars. Additionally reason why car loans and student loans are bad is because of their high interest rates. A good rule of thumb for individuals is if the debt interest rate is higher than what you would return on the market (example 6%), then it’s better to pay off the debt rather than invest.
isn't the whole point of interests on loans to combat inflation, so that those who borrow money won't cheat it w/ the system you described? you're info is misleading. 9:20 the amount of money you owe won't go up bc of inflation, but it WILL go up bc of interest: the longer you take time to pay, the higher you owe. just look at the way any typical credit card debt/loan goes. these wealthy CEOs and tycoons are not exempt from paying interests. They take out loans (whether for their business or personal spending) bc they're cash poor and 2) the kind of spending that's required to run a massive business like amazon, majority of ppl don't have that kind of money upfront to invest. that's why bezos re-invests his earnings into his business. :I'm sure if he had the chance to cover business expenses himself instead of relying on demanding and controlling shareholders and investors, he would.
since money is created out of debt it is no wonder that those who has the most money, also is in debt. but surely most people still thinks that the money is bound on a gold or silver value. ever since getting rid of the gold standard we have been left with FIAT money, worthless shit that only has the value we believe it has.
There's something people not getting. Valuation is different from actual money. And sometimes both of them are far from the truth. Like when Person A worth Billion it doesn't really mean he/she have one (he/she can have one) but more like it is projected worth.
Hauri, did you take out a loan for one million dollars to start your wonderful RUclips channel? If so, you’re one step ahead of most of your subscribers!🤑💰
Why non billionaires can't get into debt? Because they are not billionaires. Hahaha. Economy and society always look to your capacity to make money, the more capable you are the more they give you. The more you are allowed in debt. Someone once said "Debt is a privilege for the rich, but a responsibility for the poor" Like imagine if everyone can have debt like billionaires. (by that I mean debt that have leverage like the rich). That sounds like a bad thing. So they probably won't do that.
this video is WRONG, or rather missing the biggest reason, and is therefore not completely right. the reason they take out debt is because debt is new money that is created out of thin air. and is the root cause of inflation. inflation is a redistribution of wealth from those who don't have access to this new money that's created TO those who do get this newly created money. imagine having a money printing press at home, you can print money with it and buy assets, the only result is inflation as it devalues all the money already in the economy. you have q choice either print the money cause inflation and get rich, or don't print the money, but your neighbour will and you'll get poorer as your savings and living costs and wages get devalued. the choice given to you is oppress or be oppressed? the rich will always choose to oppress and print the money and steal everyone's wealth from them. this is why the rich are constantly taking on debt and using it to invest. as if your not stealing money through inflation, you are having your money stolen through inflation. inflation steals away the wealth and wages of masses, as new money is created and handed to the rich to buy assets with. debt largely functions no differently than counterfeiting money. it stealsfrom everyone else to whoever is counterfeiting the money.
Let me share a secret of billionaires you might have heard they dont pay taxes and this is absolutely right but many people dont understands how. They do not take profits out they introduce it as a capital into the company which then comes under the category of expense and government cant tax it also when they need this money lets suppose they want to buy a $4m bugatti they take a loan on thier equity and thus they never pay taxes .
similar to how you don't want to talk about how much the rich should be taxed, I would also like to throw in the loopholes they used as to avoid paying the potential 33% taxes. Whether the rate is fair is of no concern as they rarely pay that amount anyways.
I disagree with the last part. At least at 2022 interest rates. A 30 year mortgage means more home that you can buy now instead of having to settle with a piece of crap condo. This means that later on when you have a family, you can have a home fit for a family, whereas going with a cheaper condo means you'll be less able to get a family type home later on.
No det is ai was a bilioner . But wel for yearli taxes win com in det. But ma elan mede tha bigas mestek in his life... An tha deezaste ye is tha desist Twitter form 2016. Ya it SI a deam shem to sle enithig to pay tha yeralay disaster of 9 bil per yar after tha 44 bilion pay of . It is a deam shem . Me more then 50 milion $ an not a cent more . An eya don do any lons inles you do have a choice. An tha price of a doler has rizen 30% in tha last 10 yars
I mean, if you earn easly in millions then investing in loans for more assets that generate profit is good idea. Getting loan for something like a house you live in isn't an investment. It is actually a chain that blocks your growth by being tied to debt and a house.
Crazy informative stuff. Any Udemy course or Books that you recommend to learn about things like debt, index funds, hedge funds. I have trying learning this stuff but always found them boring until I found your videos.
@@LogicallyAnswered Thank you so much. I am so grateful for your reply. And also for the effort you put into these videos. This is a massive edutainment service you are providing. Be blessed. This comment is coming from Uganda. That’s how far your impact can go.
Yes I'm totally a billionaire and I can confirm it's better to have a debt when the economy is inflating to inflate the debt away if you're rich like me
It's because cash is trash, and nearly all companies opt to have more debt than cash reserves. In essence debt is like shorting the dollar, especially in this low interest rate market.
So take a long term loan don't pay it of sooner than its due, invest in the 30-40% dip, treat the monthly payment as savings and sit and wait... Got it
Debt is good, and more debt is good...aside from leveraging on debt provides debt interest deductibility against Tesla profits and leveraging on risk which indirectly pulls the local government into the debt equation...
I agree with Musk on free speech, but I do not like idealists of any political leaning. I guarantee he wouldn't lose a moment's sleep no matter what destructive action he took against his overpriced stock and its hapless shareholders.
It’s simple, Elon owns shares in his companies. Instead of selling these shares to buy stuff, he simply borrow against these shares ! Nothing magical about it
@@timothyofor9321 He has different choices, he can use his companies Divided payments to cover the debt payments. He may sell assets that he owns to make these payments if necessary.
Regarding your conclusion, I resolutely disagree. Going for the shortest term loan has the potential to massively bite a person in the ass. While yes, it does pay it off faster and minimize the total interest, it also leaves you very wide open to becoming financially ruined, should you suddenly have a new financial burden, like a medical expense, or your car dying and you have to buy a new one at higher prices. Having flexibility in your finances gives you more options. Regarding how to handle your habits, I don't have a good answer for that, but I think that's a whole other problem with a completely different solution.
That would only happen if you’re making financially unsound decisions. For example, not having a solid emergency fund or taking on more debt than you can comfortably afford.
That assumes you have enough non-liquidity things and cash reserve on top of those expenses. If you live from paycheck to paycheck, you absolutely don't want any debt. Because a slip and you are screwed. I bet the real answer will lie in a percent of your total income as debt, or a percent of your total assets. How big or small of a percent it depends, but having a bit of debt isn't that bad. As someone who had to take student debt and car debt for 10 years betting I would be earning more while I was paying the debt, it was a risk I totally took. And I compromised 85% of my earnings to debt, left only 15% for savings (yes, I was locking them away by buying bonds, no way to use them for anything else), and none for emergency, my emergency plan was just go back to my parents, lol.
It did work for me, but I don't recommend taking 85% of debt. But now that I earn 10x more than what I was earning when it started, it was totally worth. I would never be able to study and do all the things I done without debt. I paid all the debts in just 5 years. Being able to doing things is more important than not having any debt just for the sake of it, and I eventually paid all of the debt because my income grew as a result of studying (study useful things like freaking STEM, or medicine, or else, not useless SJW humanities, studying does pay off if you study useful things, lol). If I didn't take debt I wouldn't have increased my income by going to the university and doing networking there , and having a car for doing that and going to events and traveling was absolute a must. As they say, the usage value of the property/thing that is a car is much more valuable than the value of the money sitting there on the bank, I could invest in something that would give me financial results, but then I wouldn't have a car to make my professional value increase. I would just get stuck if I didn't leverage and take the risk, it was totally worth. But it requires planning and you need to be disciplined, if you don't have discipline with money, you have nothing to do with investments or debt, stay away from those sharp knives. Debt is not evil, its a just tool, like a knife, it can cut your vegetables, or your finger off.
@@LogicallyAnswered is there see law that prevents your expenses from suddenly increasing by x amount of dollars? I've heard plenty of stories of people with emergency funds getting into a huge car accident and suddenly having to buy both a new car and have huge medical bills. Or people losing their house and belongings to a storm, and spend months or years struggling to get money from insurance companies. Just to reiterate, I do agree that paying off debt as fast as possible is good, but locking yourself into an extremely high monthly payment is a recipe for trouble. My preferred solution (which I actually meant to include in my first post but forgot to, so my bad) is to go for a loan with a lower monthly payment, provided that the increased interest rate isn't too extreme. Then each month simply pay an additional amount, which in addition to paying off the loan faster, also helps to partially counteract the higher interest rate. This has two primary benefits. 1). You get used to living below your means, so you're not in the habit of spending as much. 2) Should a new large expense occur, you can free up additional income to help pay it with a few minutes of work. Now, does this still require discipline to do effectively? Yes, but I don't there is a way around that.
Because if you take out debt from your assets or stocks or calateral.....you only have to pay aprox 2% on the loan.....if you pay cash, usually you have to liquidate some of your assists and pay 30% capital gain tax.......better to pay 2% then 30%
The really rich people make debt work for them instead of working for the debt. That why they get like 1% Apr while us normal people have to deal with 23% apr.
Haven’t watched, but let me guess. They don’t have liquidity or they can’t simply take the liquidity out without consequences. Debt is simply their best option.
Bad video, I can't understand what you're trying to say. I repeated the video a shit load of times and your examples are way more complex than the question itself.
yeah if you look, someone like greame hart has $18 billion of debt and his companies have around $2b billion in revenue, 200mil profit, same with andrea pignantoro
yeah if you look, someone like greame hart has $18 billion of debt and his companies have around $2b billion in revenue, 200mil profit, same with andrea pignantoro
All of these narrated strategies or reasons to take debt are only going to work "IF" and its a Big If the future you are predicting today takes shape just as predicted. Its like you are gambling with your own future self. What if, your future self is Not as you predicted today, then all of these strategies are going to fall flat on the face. So, except for the tax saving reason all of the other reasons are just white collar gambling. People who can afford to buy money i.e. pay more money in future for less money today, are given all these crap ideas, so that the money selling business keeps pace.
It works for everyone. Just, people don't have discipline to do it. Once I converted my strategy to this, of course returns increased. But times like now in down markets aren't fun. If you aren't stone cold at this, you don't want to do it
1. take debt to avoid tax 2. the net wort is "border stupidity" measurement when it com to stock they have. As soon as you try to sell a considerably amount you have to have all that buyer to sell which is non so easy, so if they try the price will tank.
because they have soo much money. massive debt is not needed for poor people. only a small amount of debt is needed for a lower class citizen to be completely wiped out.
I've heard that this concept of "Debt is free money" I wish Logically Answered could expand on this on a later video or just the whole concept of Debt to make money. Where to start? How to start?
Ok I disagree with your point about not taking debt in one specific area for the average person. Student loans. Avg people are not rich enough to call a bank and basically get money with like no interest so they need other strats to lower their interest, like a credit score. Whats a great way to get credit score up? Loan payments. So if you have the money for college, take the student loan anyways. the interest should be close to 0% while you are in school, make some payments and since you have the money, you are not actually in danngr of losing anything. Ez Pz. Or invest some of the money and now you make income on that debt.
@@LogicallyAnswered yeah credit cards r great i highly think high schools should have credit card programs for students where they can explore credit with a guardian in a controlled environment
Well lets see... your debt is used for cars and houses etc... The rich's debts are used for them to invest If you take debt with 3% intrest and your investments earn on avrge 4% Well congrads you made a lot of money... And usually the billionaires make a lot more then the debt intrests... The point should be clear The msrket grows on avrge around 8% So wrll diversified portfolio... +leveraging as much as you possibly can... to take the debt.. =profit... I mean.............. And yes the video's nice and of course there are lots of reasons... but i mean the simplest way to put it... the rich use the debts to make and save money Your debts are for things you want to consume but can't afford...
It’s not just the billionaires. It’s the corporations as well. They leverage their capital and stock to maximize their debts to have more capital to grow.
They borrow our money to do business to earn your money. Once their business fail, you pay for it. If they succeed, the profit belongs to them.
Who's you? Are you referring to a government's bailout? Because that's not the case in any of the examples provided in this video
When they fail they lost all asset and invester lost their investment the only time people pay for it is when a bank fail not when a company fail.
When apple fail gov not gonna bail them out. But other vc might come in and swoop and take it. Or it just gonna go bankrupt.
They cant borrow your money to do business ever if they dont have something as a collateral and when they fail if its not a fraud 99% of the time they have asset to pay off the bank loan.
Wrong
Because they borrow against their stock portfolios so they never have to actually spend their own money to "buy" things. They would much rather get a handout from the bank with ~1% interest (which is tax-deductible), and the loan never has to be repaid because the stocks are collateral (known as a Securities Backed Line of Credit). This is also why they take company stock instead of a salary that would be taxed at 37%. Stock isn't taxed until it's sold, and if you're never selling and always borrowing, you avoid taxes. "Buy, Borrow, Die". Simple.
Scammer
Am confused..how do you repay the loan if you don't sell?
@@georgepresley5120, that's the thing - you don't have to. Ever.
@@georgepresley5120 pay the loan with your company's earnings
That only works in the US, which has nonsensical capital gain tax
Also, the amounts they take usually out are pennies of their total net worth. Normal people go beyond their net worth when they borrow. And even if you as a billionaire couldn't pay, because your company's value dropped for example, it's not your problem anyways. It's your banks problem for not taking doing the risk management calculations
Good point
@@LogicallyAnswered can you please make more ,this kind of videos
I mean yes, it's still your problem. Saying it's the banks problem make no sense? You still have to pay or be liquidated???
Maybe banks in US are different..in my country Kenya they will sell everything you own if they don't recoup their debt after liquidating your shares
@Ryan Swaggert How does that saying go? "If you owe the bank $100 that's your problem but if you owe the bank $100 million dollars that's the bank's problem"
Many people venture into crypto to be wealthy, meanwhile I just want to be debt free.
You work for 40yrs to have $700k in your retirement, meanwhile some people are putting just $10K in crypto from just few months ago and now they are multimillionaires..
Assets that can make wealthy
Crypto
Stock
Real estate
Gold
Investing in crypto is the most profitable investment due to its current rise, huge profits and future benefits.
@mikkycole3213I will personally introduce you to my account manager Anna S Wilson of UCLA Anderson financial Institute, her trading methods are working for me
@mikkycole3213Face book👇👇
If I was a cash rich billionaire, like the members of the Saudi Kingdom or some hedge fund managers, I doubt I’d bother taking out debt. But those tech CEOs aren’t cash rich, so it makes sense why they would.
Yeah that’s a good distinction
"cash rich" yeah when your cousin literally owns the entire petrol industry of a "country" (a region that there's people and they are the shaque, dunno how its written)
they just have so much USD and no where to put it, the best think they can do is literally spend it like crazy.
You also have inflation to worry about
They're rich only in "paper"...
@@youngatnaruto5842 that's why you invested
Quite interesting I had no idea why billionaires take huge debts. But I am quite skeptical about Twitter I think it's a human problem rather than an engineering problem. But I don't underestimate elon
Yeah, we’ll have to see how Elon handles it
You overestimate Elon
@@RandomShowerThoughts with what he has achieved with tesla and spacex. I think you should reconsider your opinion. Being a first mover(with such crazy ideas) and make both companies successful is phenomenal.
@@shivendrasingh4631 and what exactly has Tesla reinnovated? Electric cars have been around long before elon, he hasn’t delivered half of what he’s committed.
Look at that guy dancing in a robot 🤣
@@RandomShowerThoughts truth be told I admire his work but I am also not his biggest fan.
Because 99% of the time, they AREN'T billionaires. 99% of them dont have ANYWHERE near even a billion dollars. They dont have money. They own stocks, usually in companies they founded or bought outright. Their net worth is not a measure of how much money they have, but how much money thry WOULD have IF they sold all their shares at the current market rate. Which, if they begin dumping massive amounts of stock in their own company, the stock price will plunge and they will receive FAR less back than they expected to.
Very few people have all their net worth in cash and even if they did the billionaires have them in cash equivalent accounts earning interest. Most Billionaires Net Worth comes from the value of their real estate , stocks , ownership of companies, luxury assets. They can sell a few billion and liquidate that billion but they prefer to keep it in other assets that appreciate over time to protect their wealth from inflation. Bill Gates has about 10 billion in cash he now owns 1 percent of microsoft he sold nearly all his microsoft stock not to put his money in the bank but to put in various others investments instead of losing value by sitting in the bank which they bank uses peoples money to give out loans earn ten percent as well as they invest in other companies through the stock market. But having some cash is good for Day to Day expenses , emergencies , seizing opportunities that require access to large amounts of cash at once
Rich people borrow against the value of their assets. That way, they don't need to sell their assets and incur capital gains, and their debts will be eroded over time with inflation induced debt destruction.
Yep, and if they really wanted to they could sell their assets or rent them out over time to pay off their debt. Normal people don't have this luxury and are forced to build a nest egg for themselves. This is why I think more companies should give their employees the ability to buy the companies stock at a discounted rate or part of a 401k plan. Perhaps having better policies for rainy day funs would help too. A couple examples of a rainy day funds are: long-term disability insurance, and contracts that ensure an employee receives unemployment and health care for certain amount of time.
I came here to learn how to trade after listening to a guy on radio talk about the importance of investing and how he made $460,000 in 4 months from $160k. Somehow this video has helped shed light on some things, but I'm confused, I'm a newbie and I'm open to ideas.
@Jones David It is possible to produce superior performance provided you do something different from the majority. However, most of us tend to pay more attention to the shiniest position in the market to the cost of proper diversification.
@Tommy Albert Please 🙏 how do i get in touch with Bell Elizabeth? i would love to trade with her.
Does she offer mentorship tutorial?🤔
Well it isn't my first time of seeing her name of social platform. I think she's extremely brilliant and lucrative at same time.
Trading with an Expert is the key to successful trading.
Debt is treated preferentially relative to equity concerning taxes.
Most people are financially illiterate.
Unfortunately true
100% agreed, I didn't really understand money and investing until my late 20's and even now have friends who are only now in their mid 30's starting to think about it when not to long ago they'd say who cares about stock stuff and taxes.
Love your channel!!! Wish I could be as good as you at content creation.
Thank you so much Ave!
ur videos are cool my dude
Huge props to whoever did the thumbnail for this video 😂
Bro, your tutorials are a godsend! Thank you so much for your extremely valuable and educational content!!
The way these billionaire geniuses use debt is 180 degree different than the regular working class citizen.
Let's rephrase the title "What if billionaires have to pay debt like normal people, and we don't just rely on some valuation that might not be true"
It's a club. Banks need billionaires to take out big loans. Billionaires need banks to get loans for share buybacks, M&As et al. They're just facilitating money flow.
Love your channel. As you said, debt is actually not bad. Just like billionaires, corporations use debt for something called a “tax shield” where their interest payments are tax free and thus saves the corporation hundreds of million dollars. Additionally reason why car loans and student loans are bad is because of their high interest rates. A good rule of thumb for individuals is if the debt interest rate is higher than what you would return on the market (example 6%), then it’s better to pay off the debt rather than invest.
isn't the whole point of interests on loans to combat inflation, so that those who borrow money won't cheat it w/ the system you described? you're info is misleading. 9:20 the amount of money you owe won't go up bc of inflation, but it WILL go up bc of interest: the longer you take time to pay, the higher you owe. just look at the way any typical credit card debt/loan goes. these wealthy CEOs and tycoons are not exempt from paying interests. They take out loans (whether for their business or personal spending) bc they're cash poor and 2) the kind of spending that's required to run a massive business like amazon, majority of ppl don't have that kind of money upfront to invest. that's why bezos re-invests his earnings into his business. :I'm sure if he had the chance to cover business expenses himself instead of relying on demanding and controlling shareholders and investors, he would.
6:08
Dude said smaller billionaires. I would love to have this problem.
since money is created out of debt it is no wonder that those who has the most money, also is in debt.
but surely most people still thinks that the money is bound on a gold or silver value. ever since getting rid of the gold standard we have been left with FIAT money, worthless shit that only has the value we believe it has.
Debt is a very powerful tool when you know what you’re doing. Wall Street makes it’s billions off of using debt to fund its Private Equity deals
Because they use other people's money to invest in business
I wonder if the stock market and the electronic banking systems stopped working how "billionaires" would they be?
Even if we deducted 1,4 Billion from Elon’s net worth it wouldn’t be something he’d lose sleep over. 😩😩😩
True hahaha
stop pretending this is something new. People have been this rich for a long time but for some reason elon is so special.
There's something people not getting. Valuation is different from actual money. And sometimes both of them are far from the truth.
Like when Person A worth Billion it doesn't really mean he/she have one (he/she can have one) but more like it is projected worth.
Hauri, did you take out a loan for one million dollars to start your wonderful RUclips channel? If so, you’re one step ahead of most of your subscribers!🤑💰
Hahahah, I don’t have access to anywhere near that amount of money lmao
Why non billionaires can't get into debt? Because they are not billionaires. Hahaha.
Economy and society always look to your capacity to make money, the more capable you are the more they give you. The more you are allowed in debt.
Someone once said
"Debt is a privilege for the rich, but a responsibility for the poor"
Like imagine if everyone can have debt like billionaires. (by that I mean debt that have leverage like the rich). That sounds like a bad thing. So they probably won't do that.
this video is WRONG, or rather missing the biggest reason, and is therefore not completely right.
the reason they take out debt is because debt is new money that is created out of thin air. and is the root cause of inflation.
inflation is a redistribution of wealth from those who don't have access to this new money that's created TO those who do get this newly created money.
imagine having a money printing press at home, you can print money with it and buy assets, the only result is inflation as it devalues all the money already in the economy. you have q choice either print the money cause inflation and get rich, or don't print the money, but your neighbour will and you'll get poorer as your savings and living costs and wages get devalued.
the choice given to you is oppress or be oppressed?
the rich will always choose to oppress and print the money and steal everyone's wealth from them.
this is why the rich are constantly taking on debt and using it to invest. as if your not stealing money through inflation, you are having your money stolen through inflation.
inflation steals away the wealth and wages of masses, as new money is created and handed to the rich to buy assets with.
debt largely functions no differently than counterfeiting money. it stealsfrom everyone else to whoever is counterfeiting the money.
Let me share a secret of billionaires you might have heard they dont pay taxes and this is absolutely right but many people dont understands how. They do not take profits out they introduce it as a capital into the company which then comes under the category of expense and government cant tax it also when they need this money lets suppose they want to buy a $4m bugatti they take a loan on thier equity and thus they never pay taxes .
Elon could not have paid cash though. most of Elon musk's wealth is in the form of company stock he owns instead of cash.
If these people would pay taxes, we all would live in Paradise by now.
similar to how you don't want to talk about how much the rich should be taxed, I would also like to throw in the loopholes they used as to avoid paying the potential 33% taxes. Whether the rate is fair is of no concern as they rarely pay that amount anyways.
True
Yes. For Billionaires, Debt is Free money because they know how to multiply money.
this video didn't age well thanks to Musk's erratic behavior
I disagree with the last part. At least at 2022 interest rates. A 30 year mortgage means more home that you can buy now instead of having to settle with a piece of crap condo. This means that later on when you have a family, you can have a home fit for a family, whereas going with a cheaper condo means you'll be less able to get a family type home later on.
Millionarie use debt to build wealth. Because money is made of debt.
No det is ai was a bilioner . But wel for yearli taxes win com in det. But ma elan mede tha bigas mestek in his life... An tha deezaste ye is tha desist Twitter form 2016. Ya it SI a deam shem to sle enithig to pay tha yeralay disaster of 9 bil per yar after tha 44 bilion pay of . It is a deam shem . Me more then 50 milion $ an not a cent more . An eya don do any lons inles you do have a choice. An tha price of a doler has rizen 30% in tha last 10 yars
I mean, if you earn easly in millions then investing in loans for more assets that generate profit is good idea. Getting loan for something like a house you live in isn't an investment. It is actually a chain that blocks your growth by being tied to debt and a house.
Crazy informative stuff. Any Udemy course or Books that you recommend to learn about things like debt, index funds, hedge funds. I have trying learning this stuff but always found them boring until I found your videos.
I would recommend, Graham Stephan, Andrei Jikh, and Meet Kevin
@@LogicallyAnswered Thank you so much. I am so grateful for your reply. And also for the effort you put into these videos. This is a massive edutainment service you are providing. Be blessed. This comment is coming from Uganda. That’s how far your impact can go.
Yes I'm totally a billionaire and I can confirm it's better to have a debt when the economy is inflating to inflate the debt away if you're rich like me
Thank you for the confirmation sir :)
"Billionaires have a credit card" a quote from a different video. good luck taxing that other than sales tax.
Simply for avoiding tax. Paying interest is much lower cost than paying tax.
To avoid paying taxes and to get richer as inflation reduces the debt. Average people get poorer. 👎👎
It's because cash is trash, and nearly all companies opt to have more debt than cash reserves. In essence debt is like shorting the dollar, especially in this low interest rate market.
The can just declare bankruptcy if they can’t pay. That’s what all the rich people do.
True
So take a long term loan don't pay it of sooner than its due, invest in the 30-40% dip, treat the monthly payment as savings and sit and wait...
Got it
Debt is good, and more debt is good...aside from leveraging on debt provides debt interest deductibility against Tesla profits and leveraging on risk which indirectly pulls the local government into the debt equation...
this a very "i dont have the money now, but i will have it soon." sort of thing
Really simple you don’t pay tax on gains in shares until you sell them better to just borrow money from the bank at a good interest rate
I agree with Musk on free speech, but I do not like idealists of any political leaning. I guarantee he wouldn't lose a moment's sleep no matter what destructive action he took against his overpriced stock and its hapless shareholders.
If the debt makes you money/ prevents you from losing more money, why get out of it
It’s simple, Elon owns shares in his companies. Instead of selling these shares to buy stuff, he simply borrow against these shares !
Nothing magical about it
So how will he pay back the money that he borrows won't he have to sell stock at one point
@@timothyofor9321 He has different choices, he can use his companies Divided payments to cover the debt payments. He may sell assets that he owns to make these payments if necessary.
Regarding your conclusion, I resolutely disagree. Going for the shortest term loan has the potential to massively bite a person in the ass. While yes, it does pay it off faster and minimize the total interest, it also leaves you very wide open to becoming financially ruined, should you suddenly have a new financial burden, like a medical expense, or your car dying and you have to buy a new one at higher prices. Having flexibility in your finances gives you more options.
Regarding how to handle your habits, I don't have a good answer for that, but I think that's a whole other problem with a completely different solution.
That would only happen if you’re making financially unsound decisions. For example, not having a solid emergency fund or taking on more debt than you can comfortably afford.
That assumes you have enough non-liquidity things and cash reserve on top of those expenses.
If you live from paycheck to paycheck, you absolutely don't want any debt. Because a slip and you are screwed.
I bet the real answer will lie in a percent of your total income as debt, or a percent of your total assets. How big or small of a percent it depends, but having a bit of debt isn't that bad.
As someone who had to take student debt and car debt for 10 years betting I would be earning more while I was paying the debt, it was a risk I totally took. And I compromised 85% of my earnings to debt, left only 15% for savings (yes, I was locking them away by buying bonds, no way to use them for anything else), and none for emergency, my emergency plan was just go back to my parents, lol.
It did work for me, but I don't recommend taking 85% of debt. But now that I earn 10x more than what I was earning when it started, it was totally worth. I would never be able to study and do all the things I done without debt. I paid all the debts in just 5 years.
Being able to doing things is more important than not having any debt just for the sake of it, and I eventually paid all of the debt because my income grew as a result of studying (study useful things like freaking STEM, or medicine, or else, not useless SJW humanities, studying does pay off if you study useful things, lol).
If I didn't take debt I wouldn't have increased my income by going to the university and doing networking there , and having a car for doing that and going to events and traveling was absolute a must. As they say, the usage value of the property/thing that is a car is much more valuable than the value of the money sitting there on the bank, I could invest in something that would give me financial results, but then I wouldn't have a car to make my professional value increase.
I would just get stuck if I didn't leverage and take the risk, it was totally worth.
But it requires planning and you need to be disciplined, if you don't have discipline with money, you have nothing to do with investments or debt, stay away from those sharp knives. Debt is not evil, its a just tool, like a knife, it can cut your vegetables, or your finger off.
@@LogicallyAnswered is there see law that prevents your expenses from suddenly increasing by x amount of dollars? I've heard plenty of stories of people with emergency funds getting into a huge car accident and suddenly having to buy both a new car and have huge medical bills. Or people losing their house and belongings to a storm, and spend months or years struggling to get money from insurance companies.
Just to reiterate, I do agree that paying off debt as fast as possible is good, but locking yourself into an extremely high monthly payment is a recipe for trouble.
My preferred solution (which I actually meant to include in my first post but forgot to, so my bad) is to go for a loan with a lower monthly payment, provided that the increased interest rate isn't too extreme. Then each month simply pay an additional amount, which in addition to paying off the loan faster, also helps to partially counteract the higher interest rate.
This has two primary benefits. 1). You get used to living below your means, so you're not in the habit of spending as much. 2) Should a new large expense occur, you can free up additional income to help pay it with a few minutes of work.
Now, does this still require discipline to do effectively? Yes, but I don't there is a way around that.
Excellent video! I learned a few things I wasn't aware of. Thank you
Glad to hear that Stevie!
Because if you take out debt from your assets or stocks or calateral.....you only have to pay aprox 2% on the loan.....if you pay cash, usually you have to liquidate some of your assists and pay 30% capital gain tax.......better to pay 2% then 30%
3:00 It's not that he expects Tesla stock to continue to grow at that rate -- rather, if he sells any, it will trigger a collapse of its value.
The really rich people make debt work for them instead of working for the debt. That why they get like 1% Apr while us normal people have to deal with 23% apr.
It's simple, if you owe somebody 10.000 dollars, you have a problem. If you owe 10.000.000 dollars, THEY have a problem.
Haven’t watched, but let me guess. They don’t have liquidity or they can’t simply take the liquidity out without consequences. Debt is simply their best option.
Debt is a tool. If used correctly it can be a great asset.
Yep
Bad video, I can't understand what you're trying to say. I repeated the video a shit load of times and your examples are way more complex than the question itself.
yeah if you look, someone like greame hart has $18 billion of debt and his companies have around $2b billion in revenue, 200mil profit, same with andrea pignantoro
yeah if you look, someone like greame hart has $18 billion of debt and his companies have around $2b billion in revenue, 200mil profit, same with andrea pignantoro
All of these narrated strategies or reasons to take debt are only going to work "IF" and its a Big If the future you are predicting today takes shape just as predicted. Its like you are gambling with your own future self. What if, your future self is Not as you predicted today, then all of these strategies are going to fall flat on the face. So, except for the tax saving reason all of the other reasons are just white collar gambling. People who can afford to buy money i.e. pay more money in future for less money today, are given all these crap ideas, so that the money selling business keeps pace.
It works for everyone. Just, people don't have discipline to do it. Once I converted my strategy to this, of course returns increased. But times like now in down markets aren't fun. If you aren't stone cold at this, you don't want to do it
Because they subscribed to the principle of UOPM (Using Other’s Money to get rich. It still a very effective strategy.
*Debt is not real, nothing is.... Life is but a DREAM, so row the boat, Charley* ! 😏😂
Bruh, is this quote yours? 😁
@@hydrohasspoken6227 Word for word? Yes ✌️
@@dr.kawasaki7380 , keep them coming.
I remember Robert Kiyosaki once said that he had zero savings and a lot of debt.
1. take debt to avoid tax
2. the net wort is "border stupidity" measurement when it com to stock they have. As soon as you try to sell a considerably amount you have to have all that buyer to sell which is non so easy, so if they try the price will tank.
The fact that it is still allowed to take debt against a business you plan to buy and don't yet own tells you how the game is rigged.
He already had a large stake in twitter
I think Elons buying twitter for revenge because they blocked him.
Hey! Can you make a video about coin base? Seems like an interesting case!
I would not take debt because if my company begins to fail and that I remain with debts, I might end in prison
because they have soo much money. massive debt is not needed for poor people. only a small amount of debt is needed for a lower class citizen to be completely wiped out.
He bought Twitter to spite on the teen who monitored his flight.
Banks always make money become a bank 😂😂😂
The homeless beggar on the street is richer than me, Donald Trump said about himself.
your thumbnail are so holarius. why mark jekebreg like want to cry
Elon musk is rich rich
Taking out low interest debt** is a no brainer
Thats why no one has jobs for real with state contributions because they dont pay taxes
Did I hear you say a billionaire should drop a comment ? Lol 😂
Debt is the corner stone of Modern Monetary Theory.
Debt is free money since interest is still kinda low.
Not for long hahaha
I've heard that this concept of "Debt is free money" I wish Logically Answered could expand on this on a later video or just the whole concept of Debt to make money.
Where to start?
How to start?
It’s gonna rise
These guys leverage governments against the people.
The main reason, being at the top, they have access to the source code that can erase their debt. ;)
All this is ASSUMING his Tesla stocks will RISE.
Aliko dangote Africa richest ($15B) is in $16B debt.
Damn
Ok I disagree with your point about not taking debt in one specific area for the average person. Student loans. Avg people are not rich enough to call a bank and basically get money with like no interest so they need other strats to lower their interest, like a credit score. Whats a great way to get credit score up? Loan payments. So if you have the money for college, take the student loan anyways. the interest should be close to 0% while you are in school, make some payments and since you have the money, you are not actually in danngr of losing anything. Ez Pz. Or invest some of the money and now you make income on that debt.
Personally, I think you’re probably better off diligently using credit cards and eventually real estate to build credit.
@@LogicallyAnswered yeah credit cards r great i highly think high schools should have credit card programs for students where they can explore credit with a guardian in a controlled environment
Great videos I’ve been watching all your vids and I’ve learned so much! Thanks for making the best content ❤
Thank you so much Noah!
Because there are no repercussions for anything
Because they have all their money in stocks?
MONEY is debt... this is the principle of accounting. Cash is a credit with the issuer(government) - and is worth?
Well lets see... your debt is used for cars and houses etc...
The rich's debts are used for them to invest
If you take debt with 3% intrest and your investments earn on avrge 4%
Well congrads you made a lot of money...
And usually the billionaires make a lot more then the debt intrests...
The point should be clear
The msrket grows on avrge around 8%
So wrll diversified portfolio... +leveraging as much as you possibly can... to take the debt.. =profit...
I mean..............
And yes the video's nice and of course there are lots of reasons... but i mean the simplest way to put it... the rich use the debts to make and save money
Your debts are for things you want to consume but can't afford...
More debt = less tax or more tax efficient
Zuckbreg have biilion in debt
the beginning of the video looks like an ad lol
It’s not just the billionaires. It’s the corporations as well. They leverage their capital and stock to maximize their debts to have more capital to grow.
Imagine buy with margin without stoploss. :D Why would you ever use margin tbh
These things aren't an option for the average person because normal people can't get extremely low interest loans like the rich do.