How To Use Debt to Gain Wealth?
The famous Rich Dad, Poor Dad author Robert Kiyosaki has said this, “10% of the borrowers in the world use debt to get richer, 90% use debt to get poorer.”
If you are like most Filipinos, chances are you have some form of debt. Borrowing money is often seen as a bad thing, but should that always be the case? Most people think of going into debt as something to avoid at all costs. After all, when you borrow money, you take on a big financial obligation and you have to allot some of your earnings to paying interest. But it’s important to realize that debt can actually be a helpful tool if you can use it correctly. Debt is the new money. But, there’s good debt and bad debt. The rich work for good debt, investor debt. The poor pile up bad debt, consumer debt. A strategic use of good debt may help you achieve your short and long-term financial goals. Here’s how:
1. Cut down bad debt
Personal loans and credit card debts, for example, have high interest rates making it easy to lose money along with any chance of investing. Getting out of these debts must be your immediate goal, so your investment and earnings go to your savings. Structuring debt repayments where you settle high interest debts first and then concentrate on low interest debt after is also a good way to start.
2. Grow your Net worth
Purchasing a new home, starting a business, buying an investment property, or furthering your education could all help to improve your net worth under the right circumstances. Just make sure that as you grow your net worth your growing the means of your income.
3. Venture in stocks investments
Investing in stocks and bonds is the fastest way to build wealth today. But leveraging on the stock market can increase it even more. Leveraging enables investors to invest only a fraction of the cost of the stocks that they buy. But it’s risky too. Play your cards wrong and you may end up losing more than you invested. This is why you shouldn’t leverage anything that you can’t afford to lose like your home. Instead, invest your cash savings and leverage them.
4. Leverage what you have to invest in real estate
Investing in real estate requires a significant amount of money and can put a major dent in your savings quickly. This is why loans, when managed correctly, are a great way to snowball investments in real estate. However, not all loans are created equal and everyone will need a loan that is suited to their situation.
Debt is debt. Keep in your mind that debt is something that cannot be avoided but can be managed. It is a necessary financial tool to speed up business growth and personal growth too. Debt is neither bad nor good. What’s bad, however, are the types of debt that are misdirected or don’t contribute to your long-term financial goals. On the other hand, Robocash is always here to help you leverage what you have today to invest in your future.Apply now