What is good debt?

There are 3 ways you can leverage your assets to borrow against them:

🏠 Borrow against your property
📰 Borrow against your life insurance
📈 Borrow against your stock holdings

Why would you do it?

All three provide opportunities you can’t get elsewhere 👇🏻
Im not big on owing someone something. But I can’t ignore math.

I decided to finally try one: borrowing against my stock holdings.

This debt is good debt because you have the collateral, and can leverage a great interest rate because of that for further gain. 👇🏻
I have an account with @M1_Finance that allows me to borrow up to 35% of my account value at 2% interest.

That’s a really good rate!

And instead of selling my holdings to generate cash, I can leave them alone and borrow, allowing them to grow while I still use the cash 👇🏻
My @M1_Finance account has about $12,000 in it, so I can borrow about $4100.

The risk you run with doing this with stocks is getting a margin call — if the value of your stocks drop below a certain level the brokerage issues a margin call requiring you to add more money. 👇🏻
OR they can sell your shares.

This keeps them safe.

You don’t want them to sell your holdings as it would be locking in losses at lower levels.

I’m only borrowing $1500. That means my account would have to drop by almost $10k to get a margin call (unlikely) 👇🏻
What could you do with this money?

-Use it to pay off higher interest debt.

If your credit card debt was 18%, using this debt at 2% allows you to pay that off saving you 16% AND letting your stocks keep growing.

Another option is to use it to fund other investments 👇🏻
I’m using it to fund other investments.

I’m trying arbitrage, investing it in $RYLD and $QYLD paying dividends around 10% annually.

I’ll use the monthly dividend payments to pay the interest due, and pocket the rest.

It’s been a fun lesson in how debt can be an asset 👇🏻
I was able to borrow the money in about 2 minutes.

I didn’t have to go into an office.

There was no long credit check or negotiation.

I just clicked a few buttons and the money was mine.

There’s a power in that 👇🏻
This is how the rich stay rich.

They borrow without interrupting their asset growth, and can often write off the interest (the interest payments are technically a tax write off).

It was important for me to learn not all debt is bad, and you can leverage it to your advantage 👇🏻 Image
If you enjoyed this thread and are interested in the idea with stocks, check out @M1_Finance via my referral link for $50

Their plus version allows the 2% rate, and their unique pie feature lets you build your own “index funds” without the fees

For more on how to use this strategy with a life insurance policy, check out @ChroniclesNate

He will change how your brain thinks about money.
@RespectWallSt has also brought up some great points.

Three disclaimers:

-I have an emergency fund and can repay these margin loans immediately if needed.
-I’ve borrowed a very small % of my overall portfolio.
-I’ve done my own research (and so should you ALWAYS)

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More from @finance_hipster

29 May
If you have your heart set on financial freedom, but all you do is plan out ways to spend your money,

I promise you that your goals and actions are not aligned.

Home deco, wardrobe updates, landscaping, hobbies, etc. all provide opportunities to to spend IF you let them.
At some point you have to make a choice to STOP.

For me, it was such a strong choice that I actually had to talk myself into spending.

Before it was the opposite.

It was an argument not to spend. Then it became an argument to spend when I noticed myself being too cheap.
But just like any life changing decision, it’s going to take a 180.

Dieting and getting in shape — you can’t half do it. You have to go all the way to find success.

And the same is true for money. The beginning is NOT going to be easy.
Read 4 tweets
23 May
I have a confession:

I do NOT own a home. I’m renting.

A few reasons:

☝️I think the market is high
☝️Renting allows me flexibility
☝️Renting takes away pressure while looking for a property I really want
☝️I think the market is high (worth saying 2X)

A few facts scare me about the housing market.

• There are currently more realtors than homes on the market
• Foreclosures and properties are being held off the market due to mortgage/rent relief
• Home prices were rising as high as 13%+ a year from bidding wars

People are feeling pressure to buy NOW, or risk losing out on current prices and getting locked out.

They’re rushing off to lock into a mortgage far and above what they originally expected to pay just a year or two ago.

I don’t want to be rushing into a $300k+ decision.

Read 10 tweets
21 May
5 money moves that will take you from broke nobody to rich somebody in 7 years (or less) 👊🏻💥


Save $1 of every $10 you make. Start here, and as it becomes easy move to $2. Then $3, until you get to saving $5-6 of every $10 earned

This will ensure you’re consistently saving and putting more of your money to work

More money saved = more money to invest

Get rid of consumer debt NOW (other than a mortgage)

Owing others money and having monthly payments zaps your cash flow

Building your monthly cash flow (amount extra you can put to work) is a key to building wealth FAST

This frees up money that goes to work FOR you
Read 8 tweets
21 Feb
Here are a few REITs (Real Estate Investment Trusts) that I own shares of:

$O - Div/Yield 4.6%
$STAG - Div/Yield 4.53%
$CUBE - Div/ Yield 3.7%
$NHI - Div/Yield 6.45%
$MAIN - Div/Yield 7.13%
$LAND - Div/Yield 2.89%

Each pay a nice dividend yield, with several paying monthly.
As a renter, I love REITs because they provide me real estate exposure that I otherwise wouldn’t have the capital to invest in 🏡

You buy shares,

get paid dividends and capital appreciation,

and someone else has to fix the roof and toilets and collect the rent.
If researching and picking out one individual REIT company scares you due to risk,

you can also invest in multiple through an ETF.

Two REIT ETFs that I own:

🔘 $VNQ (vanguard US Fund, low cost) 3.89% div/yield
🔘 $SRET (riskier, global, higher yield/cost) 8.74% div/ yield
Read 5 tweets
23 Nov 20
We discuss a lot of books on here with money knowledge —

But films 🎥 are more rare.

That doesn’t mean you can’t learn anything though.

On today’s reel, Wall Street (1987).

Get in the car —

Gordon Geeko is teaching class today.

This film is full of fast money and stock market pump and dumps 📈 📉

Classic insider trader moves and back restaurant deals.

But buried in there are actual real money and trading gems 💎

I’ve pulled a few out just for you (because I like you, that’s why)

“I look at 100 deals a day, I chose one.”

When you first start investing, every deal looks good 🤑

You want to jump on every opportunity because to you everything looks like money.

It isn’t.

Learn to sift through the junk, and find the one.

This has saved me money.

Read 12 tweets
21 Nov 20
My current yearly allocation:

▪️401k (4% company match)
▪️Roth IRA max ($6000)
▪️HSA max ($3500)
▪️Gold 5%
▪️Bitcoin 3%
▪️Remaining goes to after-tax brokerage where I split 50/50 ETFs/Individual Companies

Savings rate: 50-60% (this gives me a lot of options)

A few other stats:

▪️I do not use DRIP (automatic dividend reinvestment)
▪️My 401k/ROTH are set up with about a 60/40 split US/International total stock funds
▪️ETFs — I favor the lowest expense ratio option when available
▪️Favorite ETFs: $VTI, $VOO, $VXUS, $ICLN, $VGT
Saw similar summaries from @thewealthdad and @DecadeInvestor and figured I’d share my own!
Read 4 tweets

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