Folly or fortitude?

[BIRMANBOY]

Excellent point Mephistopheles ..should be compulsory part of education system...would prepare us more efficiently for life's monetary moments.

It's the people who don't learn to invest when they are young who end up all at sea without a lifejacket when they are old. In my view, appropriately managed debt can be an important part of investing. "Appropriately managed" may very well mean no debt at times, depending on many factors including your experience, situation and tolerance to risk. When things go South, you can easily drown in inappropriately managed debt.

[Aaron]

So as strange as it seems to younger people the certainty of a TD is a very attractive proposition. Imagine yourself in a situation where you cannot make a living and suddenly the whole outlook is shifted. As for those unfortunate folk who got burnt in sundry finance co's and Ponzi schemes you can see how they will appeal to those looking and or needing a few more dollars on their returns. So what is the common denominator of these failures? Financial innocence or naivety or just normal old human greed. All promising (and delivering in some cases) abnormally high returns. The higher the return, the greater the risk....simple but recurring theme in any and every financial endeavour.

Keep in mind that your term deposits show as an unsecured creditor on the banks Balance Sheet and a term deposit if interest rates are suppressed and inflation boosted aren't that good long term. Also covered bonds mean that those bondholders are ahead of you if the **** hits the fan. I do imagine myself in a situation where I cannot make a living and due to my lack of investing when I was younger I am willing to take some smaller risks now to try and make up for it. I feel sorry for the people who relied on financial professionals(commission agents) when investing in finance companies but you have to wonder about people like the retired couple in Whangarei who bought a Blue Chip apartment. After their own lawyer said it looked risky Blue Chip suggested they talk to their lawyer who said it was a good idea. They do need to take some responsibility for their decisions and they found out the hard way what happens when you borrow to invest and it goes bad.

[Biscuit]

Its funny isn't it - at school its mandatory to learn calculus and physics, which 99.9% of us will never ever use in the real world yet they don't teach kids how to save money, budget, and the basic principles of investing.

I think back in horror at the amount of time I spent "learning" Latin

[BIRMANBOY]

Noli ire in debitum...does that make you feel any better?

I think back in horror at the amount of time I spent "learning" Latin

[BIRMANBOY]

Under the current system....every teacher would need to be an A.F.A. which would in turn mean that the FMA would be larger than WINZ. And one more acronym to keep them company....WTF. How hard would it be to incorporate your basics into existing curriculum. Needs some political push...John Key should take it on having seen the financial world at its most basic and its most vicious.

Its funny isn't it - at school its mandatory to learn calculus and physics, which 99.9% of us will never ever use in the real world yet they don't teach kids how to save money, budget, and the basic principles of investing.

[Biscuit]

Noli ire in debitum...does that make you feel any better?

Significantly worse as I have no idea what it means, but thanks

[Biscuit]

Noli ire in debitum...does that make you feel any better?

lol: debitum gustat optimum cum fructus scientiae

[BIRMANBOY]

Surely the devil has a computer? Is he/she lacking in google vision...I know you have a firewall, or so rumour has it anyway... Google translate can help you translate anything (mostly)...Afrikaans to Zulu or even Maori to Mongolian. However to save you time, (best spent on reducing debt), it translates to "Don't go into debt"....as you would/may have remembered if you had been paying attention.

Significantly worse as I have no idea what it means, but thanks

[BIRMANBOY]

I see you found it....ok Alii fructus in arbore, optime reliquit

lol: debitum gustat optimum cum fructus scientiae

[Schrodinger]

I have a line of credit on my house which I use for share purchases. Have used it since 2009. I use it to buy high growth, high dividend shares, so get the benefit of both dividends and capital gains. Because I buy dividend paying shares the interest is fully tax deductible against other income. At the moment I don't have any other income, and the Australian market is looking a bit sick, so its been fully repaid. But its there in case I find something I want to purchase, and that way I dont have to sell something to buy something else.

There is "good" debt and "bad" debt. Borrowing to buy positive cashflow producing, capital appreciating assets is good debt. Borrowing to buy loss-making and/or depreciating assets is bad debt. Be sensible about it and leverage gives you the firepower when you need it.

Yes borrowing is not bad if you invest in good things. My old economics professor spelled out to me why this was the case. On the other hand bad borrowing is equally as bad. If you are a particularly good investor I can't see any issue with leveraging what you can and keeping a sensible LVR.