Exponential vs Linear Growth
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.
This hidden power is the power of borrowed money; this is the surest way to get rich. The middle class and poor struggle so much because they spend their lives trying to get out of debt, rather than trying to get as deep as they can into it. If they tried to get deeper into it, they would be rich. The difference is, the rich get into good debt, which is something that the poor and middle class do not know much about.
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.
Real estate will allow you to buy with only twenty-percent down things that cost hundreds of thousands of dollars. Often, you need put nothing down.
After some time passes, both the investments, for simplicity sake, have increased by the same amount: six percent. The stock, therefore, has made us one-thousand, two-hundred dollars, and the real estate has made six thousand. Of course, you'll need to subtract the four thousand that you owe the bank for use of its money, but that still leaves you eight hundred dollars ahead of the stock's earnings.
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.
If we make another investment after this, assuming an eight percent growth rate, we will have twenty-one-thousand, two-hundred from stock, but we will have twenty-four-thousand from our real estate.
On a second investment that earns eight-percent also, we will end up with much more from real estate yet again. On a third investment with again eight-percent interest, the stock will have earned us only thirty-five-percent of what the real estate did.
The more time goes on, the higher percentage earned on capital invested in real estate. Stock, however, only grows linearly.
To truly take advantage of other people's money, one must use real estate, the essence of capitalism.
This hidden power is the power of borrowed money; this is the surest way to get rich. The middle class and poor struggle so much because they spend their lives trying to get out of debt, rather than trying to get as deep as they can into it. If they tried to get deeper into it, they would be rich. The difference is, the rich get into good debt, which is something that the poor and middle class do not know much about.
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.
Real estate will allow you to buy with only twenty-percent down things that cost hundreds of thousands of dollars. Often, you need put nothing down.
After some time passes, both the investments, for simplicity sake, have increased by the same amount: six percent. The stock, therefore, has made us one-thousand, two-hundred dollars, and the real estate has made six thousand. Of course, you'll need to subtract the four thousand that you owe the bank for use of its money, but that still leaves you eight hundred dollars ahead of the stock's earnings.
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.
If we make another investment after this, assuming an eight percent growth rate, we will have twenty-one-thousand, two-hundred from stock, but we will have twenty-four-thousand from our real estate.
On a second investment that earns eight-percent also, we will end up with much more from real estate yet again. On a third investment with again eight-percent interest, the stock will have earned us only thirty-five-percent of what the real estate did.
The more time goes on, the higher percentage earned on capital invested in real estate. Stock, however, only grows linearly.
To truly take advantage of other people's money, one must use real estate, the essence of capitalism.
About the Author:
Cody Scholberg, an expert on real estate, writes for the Investment Properties Guide, the one and only guide to investing and things such as choosing your first rental property.