Poll: leveraging

Discussion in 'Markets & Economies' started by mmm....shiney!, Jul 29, 2020.

?

Is leveraging the chance of financial freedom?

  1. Yes

    10 vote(s)
    58.8%
  2. No

    7 vote(s)
    41.2%
  1. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Interested in your thoughts about how to beat the system.

    I wouldn’t mind if you justified your choice either.

    I’ll start - the “system” is built on using debt to grow wealth so you have to play along or miss out.
     
  2. OneDay

    OneDay Active Member Silver Stacker

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    I feel the answer is 'Maybe'.

    Inflation is coming for sure. Leverage is a big risk. It depends on how what is happening plays out.

    Theres also a Australian version of the sub prime morgage crisis sitting in the waiting too. Banks must be sitting on alotta bad morgage debts right now.
     
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  3. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    The answer is a caveated yes.

    Leverage is like playing with fire....know your limits, capabilities and what you are doing and you should survive and maybe make a quid on the way through and not get burnt a bit like our friend below.

    [​IMG]



    Many uninformed FOMO individuals saw their broker neighbours getting new Merc's and holiday houses due to margin loan and went out and got their own margin loans to keep up with the Jones's cos they never thought the party would end. The Dot-com Bubble and GFC burnt a lot of people who didn't understand the risk, had never planned for something going wrong, couldn't read the signs in the market that something was in the offing or just got damn greedy and got burnt like old mate below.

    [​IMG]

    edit:image failed. re-inserted.

    [​IMG]
     
    Last edited: Jul 30, 2020
  4. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I would call mortgages a form of leverage.

    in fact I lump all debt in the leveraging basket because we borrow to enhance wealth.
     
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  5. Revils

    Revils Well-Known Member Silver Stacker

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    It's a hard one, I've always been debt averse and highly risk tolerant (not the usual combo) and it's done me well but beginning to think some debt/leveraging would be useful.
     
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  6. Jislizard

    Jislizard Well-Known Member Silver Stacker

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    I don't think you can beat the system by playing in the system and using the system's rules.

    Let's hope for some disruptive technology to come along like Uber or Air BNB.

    I am leveraged but I am not financially free, maybe in 20 years time though.
     
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  7. leo25

    leo25 Well-Known Member Silver Stacker

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    I agree, my answer is" maybe" too.

    I know people that have financial freedom that have never used leverage.

    I know people that don't have financial freedom due to leverage.

    I know people that have financial freedom due to leverage.
     
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  8. leo25

    leo25 Well-Known Member Silver Stacker

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    Is government debt leverage? o_O
     
  9. Ag bullet

    Ag bullet Well-Known Member

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    yeah it's used as leverage against the citizens
     
  10. leo25

    leo25 Well-Known Member Silver Stacker

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    Does it?
     
  11. BlackSheep

    BlackSheep Well-Known Member Silver Stacker

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    It is a tool that can be used very effectively (or disastrously). As in all things strategy and timing are key elements to think about, along with appetite for risk. :D
     
  12. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Yes, if you hold the bonds. But probably no from the government’s perspective. They only issue debt to keep their mates happy. :)
     
  13. BlackSheep

    BlackSheep Well-Known Member Silver Stacker

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    I can relate strongly with all three of those groups Leo. The dice will roll where it may. :D

     
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  14. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    How did they do that?

    And @leo25, no fence sitting either!
     
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  15. leo25

    leo25 Well-Known Member Silver Stacker

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    They inherited the family house, so never borrowed a single dollar in their life. Granted it's not the norm, but just saying some people can get away without ever accessing debt and live a very prosperous life.

    Also technically there is no fundamental reason someone can't buy a house debt free. Maybe not in Sydney though. :p
     
    Last edited: Jul 30, 2020
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  16. leo25

    leo25 Well-Known Member Silver Stacker

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    What if the central bank holds all the bonds :D
     
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  17. Lovey80

    Lovey80 Well-Known Member

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    It think leverage is more than fine. I just wish the regulators would find a mechanism to see a big chunk of all new money been made available to entrepreneurs, small business people. Everything in the Australian economy seems to revolve around housing and mortgages. If I could get my hands on $1m @ <5% over 10 years right now I would jump at the chance..... Actually 500k would be enough. Banks and these small business lenders only seem to want to know you if you have large amounts of equity in a house as collateral.
     
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  18. leo25

    leo25 Well-Known Member Silver Stacker

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    We would have to change from a socialist system to a free market system for that to happen.
     
  19. Lovey80

    Lovey80 Well-Known Member

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    Oh how I would love that.

    As a compromise I would at least like the RBA to fully account for house prices/rent averages in inflation statistics. I find it completely mad that what is the largest expenditure of the vast majority of Australians (putting a roof over ones head) is pretty much not taken into account at all when considering interest rates unless those house prices/rent start dropping. How many years did we see huge house price growth rates yet CPI was considered below the target and interest rates dropped? It's insanity.

    Maybe I'm not getting the whole picture here but I think if house prices were the proportionate part of the CPI index then more credit would find it's way into other sectors of the economy at higher rates than they currently are. My thinking is that banks would know that excessive lending to the housing sector will see prices rise and accordingly the cash rate. If a larger portion of new credit went into productive sectors of the economy, we could find ourselves creating, producing and exporting more. Sure, in time profits from those sectors would flow into housing but at least then it's on the back of increased productivity instead of arbitrarily playing the Ponzi game in the housing market.
     
  20. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Rather than leveraging I would call that a no-risk, capital guaranteed scam for institutional investors. ;)
     
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