Linear growth is seen in stock, not geometrical growth. Geometric growth, unlike linear, is not a straight line; it is much faster. Those who take advantage of geometric growth, when it comes to their money, will be rich. This is what separates the rich and the poor. This is the one and only way to become rich, in fact. Anyone can take advantage of it.
The secret power we are talking about is the power of borrowed money, as this is the surest way of them all to get rich. The poor and middle class struggle because they are seeking always to avoid debt, rather than focusing on getting themselves into good debt.
The richest people of all time built their fortunes with good debt; good debt is the force behind every one of their fortunes.
You, too, can take advantage of this power. All you need to do is dive head first into the world of real estate.
When compared with stock investment, the advantages become quite clear. Twenty-thousand put into stock versus a twenty-thousand down payment on a one-hundred-thousand dollar piece of property is a fine comparison. For simplicity sake, the bank is charging five percent on the loan.
When compared to other forms of investment, such as stock, the advantage becomes quite clear. Twenty-thousand dollars put into stock will perform worse than twenty-thousand used as a down payment on a one-hundred thousand dollar rental property.
Our stock has made us only sixty-percent of what our real estate has. The real estate made us ten percent return on investment, but the stock only made us six. Now, you tell me which the better investment is.
It gets even better. If our investments appreciated eight-percent, our stock would have earned only forty-percent of what our real estate did.
Assuming an eight-percent growth rate on a second investment, we will end up with twenty-one-thousand, two-hundred dollars in earnings from our stock, rather than the twenty-four-thousand we would have earned on our real estate.
Investing it all a third time, putting each into solely stock and solely real estate, respectively, and earning an eight-percent interest again, the stock will have ended up making us only thirty-five-percent of the real estate's earnings.
Stock grows linearly, but real estate grows geometrically.
Real estate truly allows one to take advantage of the power of borrowed money, the core of capitalism. Other people's money will allow you to become rich. - 2364
The secret power we are talking about is the power of borrowed money, as this is the surest way of them all to get rich. The poor and middle class struggle because they are seeking always to avoid debt, rather than focusing on getting themselves into good debt.
The richest people of all time built their fortunes with good debt; good debt is the force behind every one of their fortunes.
You, too, can take advantage of this power. All you need to do is dive head first into the world of real estate.
When compared with stock investment, the advantages become quite clear. Twenty-thousand put into stock versus a twenty-thousand down payment on a one-hundred-thousand dollar piece of property is a fine comparison. For simplicity sake, the bank is charging five percent on the loan.
When compared to other forms of investment, such as stock, the advantage becomes quite clear. Twenty-thousand dollars put into stock will perform worse than twenty-thousand used as a down payment on a one-hundred thousand dollar rental property.
Our stock has made us only sixty-percent of what our real estate has. The real estate made us ten percent return on investment, but the stock only made us six. Now, you tell me which the better investment is.
It gets even better. If our investments appreciated eight-percent, our stock would have earned only forty-percent of what our real estate did.
Assuming an eight-percent growth rate on a second investment, we will end up with twenty-one-thousand, two-hundred dollars in earnings from our stock, rather than the twenty-four-thousand we would have earned on our real estate.
Investing it all a third time, putting each into solely stock and solely real estate, respectively, and earning an eight-percent interest again, the stock will have ended up making us only thirty-five-percent of the real estate's earnings.
Stock grows linearly, but real estate grows geometrically.
Real estate truly allows one to take advantage of the power of borrowed money, the core of capitalism. Other people's money will allow you to become rich. - 2364
About the Author:
Cody Scholberg, a recognized expert on finance investment, writes for the Investment Properties Guide, your resource to investing and things such as buying your first rental property.
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