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Can You Use Debt to Build Wealth?

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Author: Marubozu

This article originally appeared on Payment1.com

 

The short answer is YES. You definitely can. It all depends on what kind of debt, and how smart you are about using the money you borrowed, and how diligent you are at paying it off. So now you may be asking, if debt can be used to build wealth, how do I do it?

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First off, you need to know about the two kinds of debt: Good Debt and Bad Debt. Good debt is a kind of debt that has low interest and is used to increase your value in the long run. Bad debt, on the other hand, has atrociously high interest and depreciates in value fairly quickly. Examples of good debt would be student loans and small business loans. Bad debt would be payday loans and credit card debt.

 

So if you really want to start getting a lot of money using loan money, you need to make sure it’s the good kind of debt. That part is simple. Now let’s get to the hows.

 

Let’s start with small business loans and the idea of leverage. You can take out a small business loan to help you improve your business. The more you invest in yourself and your business, the greater your chances are of increasing the flow of your income. You can use your small business loan to increase your inventory, or add a branch or service to the current ones you already have. Using loan money as financial leverage to increase your cash flow is a good idea. If you don’t have a business, you can always get a small personal loan and then start a business or invest in educating yourself about a particular business or skill. The more you invest in yourself, the bigger your value will be.

 

But what if you already have bad debt? Would this affect your ability to build wealth using debt? It would, but perhaps not as much as you might think it will. For example, you have several credit card debts and they are growing by the month. You struggle to pay off even just the minimum and building wealth is beginning to look like a pipe dream. You can try doing debt consolidation. What this does is lumping all of your debt into one big debt with a lower interest. This way, you don’t owe several banks different amounts of debt with various interest rates.

 

In order for you to be able to build wealth, using debt or not, the very first step is to get rid of, or to manage your bad debt. Once you get that squared away, you can start building your wealth. It is a good thing to remember to always live within your means. And the simple math of income being greater than living expenses should always be something you live by.

 

Which leads us to the next tip: Reduce your living expenses. The greater the difference is between your expenses versus your income, the more money you have to use as an investment. And perhaps, the best advice one could give when it comes to finance is this: always pay your debt on time and if at all possible, always pay in full.

 

 

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INVEST Fair 2019: Invest with Knowledge

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Author: Marubozu

About INVEST Fair 2019

Into its 13th year, INVEST Fair continues to be the largest investment event in Singapore that features world-class speakers, industry experts and investors in the region.

In line with our theme of INVEST with Knowledge, we have curated a series of activities on ground that aim to introduce you to new financial products, instruments and insights to both local and regional markets.

This year, we have invited 3 speakers renowned in their own area of expertise to share the latest trends and insights of 1H2019 as well as their views for the second half of this year.

 

Below is a short introduction of them:

Hu Li Yang

Hailed as the “Godfather of Asia stock market”, investment guru Hu Li Yang is a familiar face at INVEST Fair. Being a highly sought-after speaker with his unique insights and bold predictions, Mr. Hu has a group of faithful followers. He is also the author of multiple Mandarin titles. Catch him in action on 18 August, Sunday at Seminar Room 4 from 4.45pm – 5.45pm.

 

Jeff Fischer

Jeff is the portfolio manager of The Motley Fool Pro hedge fund and Chief Investment Officer at 1623 Capital the home of the fund. He joined The Motley Fool in 1996 as co-manager of the original long/short Fool Portfolio on Fool.com with the company co-founders David and Tom Gardner and went on the found and manage the long/short Motley Fool Pro, a real-money subscription newsletter service.
Catch him in action during his keynote – 2019 Technology Industry Trends – Beyond FAANG on 17 August, Saturday at Seminar Room 3 from 10.30am – 11.15am and Fireside Chat on the same day, same room from 4.45pm – 5.30pm.

 

Stuart McPhee

Stuart is an Australian private trader for 20 years. He is also an author, trading coach, licensed adviser and a regular speaker at major trading events internationally. He travels regularly and presents at major trading events; seminars and he also conduct staff training and personal trading coaching. He is also the author of a best-selling trading book, ‘Trading in a Nutshell’.

Catch him in action during his keynote – Developing a Trading Strategy with Consistency on 17 August, Saturday at Seminar Room 4 from 1.30pm – 2.15pm and Fireside Chat on the same day at Seminar Room 3 from 4.45pm – 5.30pm.

 

 

Key highlight of this year’s INVEST Fair includes:

Stock Engage

Engage with our Product Specialist on a bihourly basis at ShareInvestor’s booth as he shares insights to the hottest stocks to look out for based on the various investing strategies. For new signups/renewal on ground, attendees will be entitled to both a chance at the claw machine and bihourly lucky draw to win attractive prizes.

The Trading Zone

Ever wonder what it would be like when industry pros get together? Step into the Trading Zone and find out. Partnering with CME Group, TD Ameritrade will bring you insights on various trading strategies and a look at trade tariffs, Fed watch – your guide to 2019 market action.

INVEST with Confidence

Meet local investment bloggers to learn and explore how to invest with confidence and bring your portfolio to greater heights.

SGX Pavilion

Broaden your investment horizon and uncover opportunities amongst the wide array of asset classes and products with Singapore Exchange.

Fireside Chat

A brand new and intimate segment with 2 of our keynote speakers – Jeff Fisher and Stuart McPhee where we explore the two major school of thoughts when it comes to approaching the market and how they affect the strategies investors adopt.

Event details
Date : 17th (Saturday) and 18th (Sunday) August 2019
Time : 10am – 7pm (Saturday)
11am – 7pm (Sunday)
Venue : Suntec Exhibition and Convention Centre Hall 401 – 402
Admission : FREE
Website : http://www.investfair.com.sg