The very wealthy take out loans backed by their stocks so they don’t technically have income.
But wouldn’t they be taxed when they sell stocks to repay the loans?
In: Economics
Be rich investor. Have $50 million in assets.
Go to bank and get low interest loan using assets as collateral. Get $25 million loan money at 2% interest.
Buy $12.5 million in more assets, live off of other $12.5 million for 5 years. Have $62.5 million in assets growing modestly at 10% per year.
5 years latter. Still owe nearly $25 million to bank and nearly out of money. Assets worth $100 million. Go back to bank.
Get another loan at low interest using assets as collateral. Get another $25 million or more.
Process repeats till death.
Latest Answers