Your example of the mortgage gains omitted the interest you pay in your borrowed funds. Let’s say you borrowed that 400k at 5%, your interest payment in year one would be 20k, leaving you with a leveraged return of only 5k. You wouldn’t unlock that leverage benefit until at least year 10.
Hi Kiran, another fab video, thanks for the info. leveraging works well when the asset you are purchasing increases in value ie a property but can be disastrous when the asset falls in value, obviously Billionaires already have the finances to take this risk, I wouldn't suggest that the average Joe in the street take on too much debt , it's a high risk strategy.
Agreed, I used this methodology when rates were super low to purchase investments, albeit when the base rate hit 5%, I paid off my interest only mortgage as there was no cost benefit anymore to me. Unless you can offset the loan repayments, i.e., commercial loan, it's not that beneficial in the UK anymore.
this is oversimplified, forgetting high interest on mortgages and associated costs of ownership of property (maintenance etc) which wipes out all of your profit
Kiran jee, your content is very valuable and digestible for people who get put off with the financial jargon. ❤ I am wondering if you have considered making byte sized modules of financial education for schools which is when they form money habits that mostly stick with them for life.
Some good points, but what about the interest payments over 25-30 years for a mortgage. The interest payments over this time frame is often a significant sum of money.
@@Known-unknowns Maybe. It's worth noting that going forward most people will be apparently paying around 5% for a mortgage and most people are not billionaires or celebrities. Also sometimes the music stop's for long periods of time, for example, historically we have had dip's where it took 8 years for it to recover. The opportunity cost example was a good point, for example, the S&P 500 has an average return of 7%, but there are of course other variables to consider such as associated costs and tax implications.
If only I was a billionaire then I could afford to get a low rate loan.... 🤷 I'm just a regular guy, never got taught or learned about personal finance and how to be financially responsible and had to learn the hard way. Decided to tackle my debts and finds I had almost 12k of bad consumer debt. Cleared it after 3 years and now just have the mortgage. Don't ever plan on getting more debt again. Got rid of my credit cards, I can't be trusted to be disciplined enough with them.
I hear you brother! Massive well done for clearing the debt! Same here, no education, tons of bad debt but now setting about getting it clear! As you say, all except the mortgage 🤣 Twelve more years of that 😭😭😭
You’re very smart. I’m aware of this because I follow all the rich people on your tube. I know what they do and I do an awful lot of ending. I was also trying to understand why they use credit cards, rather than debit cards. It occurred to me it’s because providing they always pay it on time, they save money and never use their own. The delay in having to pay by about thirty days means they also generate more interest. You have a full time job though like myself. Both of us should be borrowing and investing in property and never selling so all the money we gain goes into repaying the mortgage. No CGT and just passive income.
It depends when you pay, because if you time it right you can get almost 60 days. When you know you statement is due for example on 15th of the month and you use the credit card just after this date, you will have almost a whole month before your next statement at which point you will be billed for this debt. You then have an additional month before that statement amount becomes due for payment, so in effect you have managed to get almost 60 days.
I am british and I am considering retiring overseas, specifically Argentina. It would be interesting to see a video on this from your tax perspective. I have isas, sipp and property in the UK. Thanks
1. Inflation is legalised counterfeiting 2. Counterfeiting is criminalised inflation 3. So central banking is a coordinated currency counterfeiting cartel...that runs the world
This video should be made compulsory material before you get a credit card or anything on credit , it will save a generation of people from going into bad debt and educate them into building wealth. Debt is like a super power, if used wisely it builds wealth for you else ruins you
But this has lead to the world of debt and interest which will lead to recessions. Now, I know so many landlords and property investor are trying to sell their properties because of interest. People think oh I am going to make ££ because of debt invested in assets but ultiamtley interest will catch up and society and these investors suffer. This is why usery or interest is forbidden in islam and even Christianity because God deems it to be unfair to the borrower and not the lender. Many are trying to open banks because of this but the people are getting poorer. This is an unethical model for business. Jay z is by far not a role model. How you impact society is also an important principle. This idea of me me me is casuing the world to go into recession every few decades.
Ethically, debt creates a rich and poor divide. Only a very few become enormously rich and the rest of society are enslaved with bad debt. So, good debt is also bad. We need an alternative ethical financial system perhaps Islamic banking for the future.
Id rather buy outright owe the central banking cartel nothing and rent it out to people that need a home at a low cost because im not at the mercy of interest rates etc. rather make a passive income on something i dont owe debt on. fractional reserve banking is a ponzy scheme
This type of info does not apply to 85% of people. Not because it does not work but because they have no intellectual ability to apply it and this could be simple diaster for them.Otherwise everything she said applies to normal time economy.
Would be interesting to have a video on when a self-employed should create his/her own company instead and get dividends instead of salaries.
Your example of the mortgage gains omitted the interest you pay in your borrowed funds. Let’s say you borrowed that 400k at 5%, your interest payment in year one would be 20k, leaving you with a leveraged return of only 5k. You wouldn’t unlock that leverage benefit until at least year 10.
You are also using an American system where the rate stays the same where the uk system is linked to the Bank of England base rate
This Should be taught in schools. Then our children wouldn't get into debt.....
The matrix wouldn't let you teach the tax system in school
Children won’t listen any way ,,!
it is just not in public school
Unfirtunately, I think that's exactly why it's not taught.
The last thing the "controllers" want is an educated population.
Hi Kiran, another fab video, thanks for the info. leveraging works well when the asset you are purchasing increases in value ie a property but can be disastrous when the asset falls in value, obviously Billionaires already have the finances to take this risk, I wouldn't suggest that the average Joe in the street take on too much debt , it's a high risk strategy.
Hello! Yes great point; it can be risky. Thanks for sharing!
Financial literacy is key
Very Good information. Really appreciate your videos. Subscribed.
Agreed, I used this methodology when rates were super low to purchase investments, albeit when the base rate hit 5%, I paid off my interest only mortgage as there was no cost benefit anymore to me. Unless you can offset the loan repayments, i.e., commercial loan, it's not that beneficial in the UK anymore.
this is oversimplified, forgetting high interest on mortgages and associated costs of ownership of property (maintenance etc) which wipes out all of your profit
This is so insightful. Please keep it up. Thankyou for sharing your knowledge
Thank you Kiran, I am really enjoying your videos. The content is very useful.
Really insightful info; thank you!
Kiran jee, your content is very valuable and digestible for people who get put off with the financial jargon. ❤ I am wondering if you have considered making byte sized modules of financial education for schools which is when they form money habits that mostly stick with them for life.
Some good points, but what about the interest payments over 25-30 years for a mortgage. The interest payments over this time frame is often a significant sum of money.
So is the capital gain on the property. It’s more.
@@Known-unknowns Maybe. It's worth noting that going forward most people will be apparently paying around 5% for a mortgage and most people are not billionaires or celebrities. Also sometimes the music stop's for long periods of time, for example, historically we have had dip's where it took 8 years for it to recover. The opportunity cost example was a good point, for example, the S&P 500 has an average return of 7%, but there are of course other variables to consider such as associated costs and tax implications.
Amazing video, thank you for sharing
If only I was a billionaire then I could afford to get a low rate loan.... 🤷
I'm just a regular guy, never got taught or learned about personal finance and how to be financially responsible and had to learn the hard way.
Decided to tackle my debts and finds I had almost 12k of bad consumer debt.
Cleared it after 3 years and now just have the mortgage.
Don't ever plan on getting more debt again.
Got rid of my credit cards, I can't be trusted to be disciplined enough with them.
I hear you brother!
Massive well done for clearing the debt!
Same here, no education, tons of bad debt but now setting about getting it clear! As you say, all except the mortgage 🤣
Twelve more years of that 😭😭😭
@@grahamhill4164 love that, well done brother!
Well done, excellent video!
Great Vid. Thank you.
Love this! Thankyou. ☺️
You are also assuming prices going up and a majority of times they do I have seen some places they stay stagnant or even decline because of the areas
This is priceless - love your channel - Thanks so much
great actionable info
You’re very smart. I’m aware of this because I follow all the rich people on your tube. I know what they do and I do an awful lot of ending. I was also trying to understand why they use credit cards, rather than debit cards. It occurred to me it’s because providing they always pay it on time, they save money and never use their own. The delay in having to pay by about thirty days means they also generate more interest.
You have a full time job though like myself. Both of us should be borrowing and investing in property and never selling so all the money we gain goes into repaying the mortgage. No CGT and just passive income.
It depends when you pay, because if you time it right you can get almost 60 days. When you know you statement is due for example on 15th of the month and you use the credit card just after this date, you will have almost a whole month before your next statement at which point you will be billed for this debt. You then have an additional month before that statement amount becomes due for payment, so in effect you have managed to get almost 60 days.
You always end up paying it from your own money in the end???
I am british and I am considering retiring overseas, specifically Argentina. It would be interesting to see a video on this from your tax perspective. I have isas, sipp and property in the UK. Thanks
Sounds weird.What do U know about Argentina first?
1. Inflation is legalised counterfeiting
2. Counterfeiting is criminalised inflation
3. So central banking is a coordinated currency counterfeiting cartel...that runs the world
Excellent information.Thank you
Glad it was helpful!
This video should be made compulsory material before you get a credit card or anything on credit , it will save a generation of people from going into bad debt and educate them into building wealth. Debt is like a super power, if used wisely it builds wealth for you else ruins you
Thank you so much for watching, and for your kind comment
Thanks for sharing
Thanks for watching!
Good get the universal principle about money making money and not to use your own, but how’s about focusing on the UK and the average Joe
I sleep better without a mortgage. If I get hurt a work, and unable to work, I will be very glad I don't have a mortgage.
It's risky but fortune favours the brave.
sometimes
So it sounds like you need to have already a lot of money to be able to afford a mortgage at lower rates...
But this has lead to the world of debt and interest which will lead to recessions. Now, I know so many landlords and property investor are trying to sell their properties because of interest. People think oh I am going to make ££ because of debt invested in assets but ultiamtley interest will catch up and society and these investors suffer.
This is why usery or interest is forbidden in islam and even Christianity because God deems it to be unfair to the borrower and not the lender.
Many are trying to open banks because of this but the people are getting poorer. This is an unethical model for business.
Jay z is by far not a role model. How you impact society is also an important principle. This idea of me me me is casuing the world to go into recession every few decades.
Absolutely
U have to be cpa with ein and based in usa cause I am also based in usa
The problem with old petrol cars is ULEZ.
Ethically, debt creates a rich and poor divide. Only a very few become enormously rich and the rest of society are enslaved with bad debt. So, good debt is also bad. We need an alternative ethical financial system perhaps Islamic banking for the future.
I just learned something
4:21 or buy four more 500k houses putting 100k down on each
👍
You didn't say that a good debt saves paying tax
You should watch derelict property channels… not a good idea
Just Suscribed,
Avoid debt in first place.
If only my wife would understand this she’s old fashion and likes to be debt free
avoid taxes
How do we stop this exploitation?
You are explaining how amazing is leverage, and implying buffet is stupid telling you to stay away from leverage.
This video is not properly made its misguided ignoring inflation factor from opportunity cost. She should have to guide properly.
Can you speak Punjabi .Financial Freedom a Great way to enjoy life .thanks .
a mortgage is a debt
Id rather buy outright owe the central banking cartel nothing and rent it out to people that need a home at a low cost because im not at the mercy of interest rates etc. rather make a passive income on something i dont owe debt on. fractional reserve banking is a ponzy scheme
This type of info does not apply to 85% of people. Not because it does not work but because they have no intellectual ability to apply it and this could be simple diaster for them.Otherwise everything she said applies to normal time economy.
You are explaining how amazing is leverage, and implying buffet is stupid telling you to stay away from leverage.
Dangerous advice !!!!!!
The borrower is slave to the lender 🙂
If u are an accountant, I am in need of one. I am located in usa. Any waY to get intouch with u mam legal legit help needed