Very Interesting article WSJ: In summary, "Hold the Stocks, borrow instead",

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Old 07-11-2021, 12:28 PM
TNGary TNGary is offline
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Default Very Interesting article WSJ: In summary, "Hold the Stocks, borrow instead",

I found this to be an interesting article that perhaps other would also find interesting,

A few notes from the article:
If an asset appreciates faster than the interest rate on the loan, they come out ahead. The more they can borrow, the longer they can hold appreciating assets. And the longer they hold, the bigger the tax savings.

If you use the link below, X out (decline) that you want to subscribe, as it will ask you such. I was able to access and do not subscribe to WSJ.

Buy, Borrow, Die: How Rich Americans Live Off Their Paper Wealth - WSJ

Last edited by TNGary; 07-11-2021 at 12:48 PM.
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Old 07-11-2021, 12:36 PM
retiredguy123 retiredguy123 is online now
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Thanks, but it looks like you need to post your WSJ login information to access the article.
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Old 07-11-2021, 12:47 PM
TNGary TNGary is offline
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Quote:
Originally Posted by retiredguy123 View Post
Thanks, but it looks like you need to post your WSJ login information to access the article.
Txs for feedback, If you x out of the subscription offer it should let you in as I do not have a WSJ subscription and was able to access,
thanks for sharing the feedback,
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Old 07-12-2021, 10:56 AM
Blueblaze Blueblaze is offline
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As a pilot, the idea of borrowing to stay wealthy reminds me a lot of the old aviation joke:

"How do you make a small fortune in aviation? Start with a large fortune!"
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Old 07-12-2021, 11:00 AM
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dewilson58 dewilson58 is offline
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Invest with debt, one investment strategy.

Invest debt-free, one investment strategy.

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Old 07-12-2021, 01:42 PM
Babubhat Babubhat is offline
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Nothing new. Defer gains until you die. Get step up basis. Deduct interest currently,

A giant outrage should be allowing sports teams to depreciate the cost of the team over 15 years. Massive billionaire tax break

Last edited by Babubhat; 07-12-2021 at 02:29 PM.
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Old 07-12-2021, 02:35 PM
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This is the story of my life and it has worked out well for me. Although I no longer am leveraged in a big way I still have a couple of 3% loans on investment properties. Capital which could be used to pay them off remains in liquid investments paying me far more.
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Old 07-12-2021, 02:50 PM
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Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

~ Judge Learned Hand
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Old 07-12-2021, 03:20 PM
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Another helpful technique in achieving wealth is the famous "Swap 'til you drop!" using section 1031 exchanges. Although I have not directly benefitted from it by using it to trade up, I have sold properties to those who have. In one case in a very hot apartment market in I believe 1976 I was receiving half a dozen fourplexes which were presold to separate buyers in trade toward my 36 unit apartment building. One of the fourplex sales crashed and I ended up getting another $5K for it which bought a lot of beer back then. lol.
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Old 07-17-2021, 07:16 AM
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Margin loans to finance investments is a strategy I used in the past, but beware of "black swan" events.

When you are highly leveraged, events like the 9-11-2001, 2007-8 recession, and March 2020 pandemic lockdown start will strike you quite hard.

I was leveraged in the late 90s, and was hit hard by 9-11. I unwound everything, and avoided margin ever since. Fully recovered since then, and did not sell since, surviving the other events mentioned above by staying fully invested.

A friend, unfortunately, did not and despite my warnings, was heavily leveraged with margin loans but had no downside protection (options). March 2020 almost wiped him completely out, but he lost millions.

He used margin loans for living expenses. He did not want taxable income, and this was his way of building wealth. March 2020 led to daily margin calls. I'd did not help that his investments were also leveraged ETFs - one being an ETF that was a 3x DOW ETF - if DOW went up or down 100 points, it was as if his ETF went up or down 300 points.

If all this is Greek to you, and you don't understand using options to protect your investments, you probably stay far away from margin loans to leverage your purchase power, or pay for your lifestyle.

My only adventure these days are to take advantage of low or 0% interest rates, and keeping funds invested that payme a higher interest rate. Arbitrage...
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