4 ms·
I have $100 and i need $2 so i go through the trouble borrowing it? That's if you have a measly billion dollars. Now if you've got $10B, that's like financing
by melling 10y ago
I have $100 and i need $2 so i go through the trouble borrowing it? That's if you have a measly billion dollars. Now if you've got $10B, that's like financing 20 cents.
- jedberg 10y agoYou're forgetting about taxes. If you sell something worth $100, you probably aren't going to pay $30 in tax on it (or probably anything at all). If you sell something worth 100 million you're going to pay 30 or 40 million in taxes. With the loan you won't pay any tax now, you might pay it later, or you might not ever pay it because you'll have that loan until you die and the bank will be the beneficiary of 100 million of your estate.
- melling 10y agoyou only need $2. There's no need to cash in $100.
- jedberg 10y agoYou're right I missread but the point is the same. Taxes. The whole thing changes when you're trying to be tax efficient.
- harryh 10y agoThen you just die with more assets which will incur higher estate taxes. The estate tax rate is higher than the long term capital gains rate. Estate taxes are paid before creditors.
- networth 10y agocapital gains tax is lower, no?
- jedberg 10y agoSure, but you still have to pay taxes, whereas if you get a loan you just pay interest (probably a very low rate) and defer the taxes.
- prostoalex 10y agoI think major shareholders of Kodak, MCI WorldCom, Enron or Polaroid would point out the concentration risk one is incurring.