Adele's worth $220 million but took on debt for a house. Wealthy people use debt strategically when borrowing costs less than investment returns, letting them keep capital working elsewhere and defer taxes.
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Why does Adele get a mortgage or take debt when she is worth 220 million? Shouldn't she just pay cash and own it outright? This is the difference between good and bad debt. Good debt is when you're able to borrow money at a lower rate than you can earn by investing that same amount of money. This means you're able to turn a profit and grow your wealth because that money is making more than you are paying on your interest payments. This same idea is applied to almost everything you do. If you can get debt out on your business that is less than than the increase that you get from having more cash in the business, you should do it. Celebrities use stock collateralization. So they take out debt on their actual stocks and put it back into the stock market in order to earn double but not pay tax capital gains. If you don't understand the difference between good debt and bad debt, you'll never be wealthy. Most people, including me, have an immigrant mentality that says we don't want debt. If you look at this list of the Forbes 100, not a single person on there has no debt. They have billions and billions of dollars. Debt can be incredibly just that. Not everybody wants us to know that.
