Mark Moss explains why wealthy people borrow against assets instead of selling them. A $2 million asset that compounds at 20% annually could be worth $64 million in a decade, so selling early costs you that gain. Better to take a 7-10% loan and let the asset keep growing.
And so the reason why the wealthy never sell their assets is, let's say that I was able to turn $1 million into $2 million and I sell it and I take this money and I go on vacation and I send my daughter to college and I buy a new house and I buy a new car. Well, that's cool. I take that extra million I made and I buy these things that I wanted, but what I gave up is $64 million if I just would've waited another decade. That is the cost of you selling your assets. And that's what the wealthy know. So what we want to do instead is if I want this million dollars right here, what I could do is I could take a loan out for the $1 million. Now, of course, I have to pay back this loan. This could cost me 7 to 10%. But again, we've established this is going up by 20%. So if this is going up at 20%, but I have a loan at 10%, I'll take that deal every day. As long as this asset continues compounding faster than the rate of the debt that I have to pay, I'll want to do that forever. If you want to know more about creating a wealth operating system, just comment ready and we'll send you the link.
