Mark Moss explains how to borrow against appreciating assets to get cash while they keep growing. If your assets compound at 15% annually and debt costs less, the asset growth outpaces what you owe. A $5 million asset doubles every five years, hitting $80 million in twenty years while you draw credit along the way.
Person B is doing a little bit differently. What they're doing is they're issuing credit against their assets for liquidity. I call it harvesting appreciation. Because the assets are going up at about 15% a year and they're compounding, they're taking a little bit of the cream off the top, a little bit of the appreciation off top by issuing credit against the assets. But because the assets are growing way faster than the rate of debt, it's outrunning the amount of debt. The way compounding works is at the 15% rate, we go 72 divided by 15 is 4.8. Let's just call that 5 years. So what that means is that if they start with $5 million, within 5 years, it's $10 million, 5 more years, it's $20 million, 5 more years, it's $40 million, 5 more years, here we are, $80 million.
