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is it crazy? If you can get terms on low enough interest rate and long enough time horizon (aka, you're rich) it's not a bad choice because you are (safely) ga
by dnautics 6y ago
is it crazy? If you can get terms on low enough interest rate and long enough time horizon (aka, you're rich) it's not a bad choice because you are (safely) gambling that your earnings potential will go up over time, in both real and nominal terms, letting the cost of the debt decrease over time. Moreover, the opportunity cost of that cash not being invested and used for purchases is real.
- pokot0 6y agoYou assume people are investing that money. What I see is people having a lifestyle that is only possible with lended money. Those are expenses and not investments and put you in a position where a minor change in your expected income growth will deeply affect your lifestyle.
- dnautics 6y ago> if you make 200.000/yr Ok. Let's rephrase this. If you are in that category, you should take the loan on the lambo and invest whatever the principal WOULD have been and come out ahead instead of paying for the lambo in cash in one shot. Also goes for less frivolous purchases. All I'm saying is your suggestion is a poor protip for the wealthy, and a better protip for the middle class e.g. Also note that economists are mostly in the wealthy category and a good chunk of our socioeconomic woes come from economic policymakers (often implicitly [0]) normalizing harmless or good advice for the wealthy onto other stratas of society. [0] e.g. "inflation is good because it decreases the real value of debt and lower classes benefit from that"