I see loads of investors or financial advisors saying that “buy assets. Money in the bank will mean nothing”. I don’t understand how spending helps even if it is on assets. How can one take loan and buy a house? If one has savings to see them through in case they get out of budget isn’t that better? Or is poor-person mentality?
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The short version (_and best guess_):
* Money in the bank means money out of circulation. Buying assets = putting money back into the market.
* When you take out a loan, the bank is usually the lender, setting the interest rate and schedule of repayments. When you make a payment each month that money goes into a pot the investors pull from to make risky investments of their own. No house / loan = less money for them = no good.
Take any financial advce with a grain of salt. Most are not in the business of protecting anyone’s interests but their own.
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