RICH use debt!
posted in debt |
There is a business report which I would like to share about the rich using debt as a financial tool to make more money.
Statistics in the US and South Africa show that the rich are increasingly accounting for a disproportionately bigger share of borrowings from banks.
But unlike the middle-income earners who borrow to finance their living costs, the rich often use debt as a financial tool. This is one way in which the gap between the rich and the poor is widened.
Too much inequality is not good for any society, much more so in a country like South Africa where much inequality is a result of racial discrimination.
Most of the debt owed by the rich is for mortgage bonds on primary or secondary residences. “After buying up second [and third and fourth] homes and funding ever more lavish lifestyles, today’s risk-friendly rich are embracing debt as a way to expand their fortunes and fund increasingly acquisitive lives,” the Wall Street Journal said in January.
Figures from the Federal Reserve Board’s surveys of consumer finances showed that the richest 1 percent of Americans held 7 percent of the nation’s debt in 2004, with a total of $650 billion (R5 trillion) of borrowings, up from 5 percent in 1998, the journal said. The survey is conducted every three years to provide detailed information on the finances of US families.
The richest 1 percent are households with net worth’s, including primary residences, of at least $6 million. Debt for this group grew faster than for any other group in the Federal Reserve Board’s survey. It grew 150 percent between 1998 and 2004.
So the rich know how to use all that debt to their advantage. Kiyosaki’s rich dad series is one of the best sources to learn about debt and investments.
