Debt simply means borrowing money. Reasons for Borrowing money can come in two separate forms either borrowing to purchase something that generates money (real estate that generates rent) or borrowing to obtain something that doesn't generate money in return eg car, clothing, food and other consumables.
Wealthy people prefer borrowing to invest instead of using their own money especially if the profit can cover and return can cover repayment of the debts and add to their wealth. Because debt is not taxable by the government instead of tax interest is paid and in most cases the interest rate is reasonably lower than the tax rate.
Let's say you want to buy a house that costs $100,000 with a loan the house can be bought using a mortgage of maybe 5% interest per year and the house can be rented out for $600 monthly and maybe the mortgage payment is $500 per month so the rent can cover for the mortgage and still give you a $100 profit and once the mortgage is paid off after some years you gets the full $600 and the house. And also the house value can also rise
Another way is to borrow and invest in a company that gives you more returns than the interest rate for example if you borrow from the bank with 7% interest rate per year and invests in a company that guarantees 15% returns.
Which means you can pay back your loan and make some extra profit.
But debt also comes with it's own risk for example when the Value of the property reduces or when the company is not performing well. It can be difficult to pay back the loan and be a serious financial burden.
Therefore every financial decision requires serious planning and analysis.
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