Tuesday, February 26, 2008

Borrowing money is still SMART

The word "debt" or "mortgage" has never been so "badly" popular as in the last few months.
It looks like the full world is drowning into debts and bankruptcy and making a loan is some sort of devilish practise that will bring you to ruin.
I still believe that making debts for the right goal is a positive way of living and working.
Debts allowed people to reach goals they wouldn't have been able to.
Let's talk about the most common reason why a family makes a loan: to buy a home.
This, in my opinion, is a smart way to invest your money.
Because you buy something you need today and will pay for it in the rest of your life, while you enjoy it at once.
And you save the rent of course.
A property in England, not so many years ago, a "gentleman house" in a very sought of location, was considered expensive at the some of 12000 pounds.
Nowadays that sum of money is considered almost ridiculous.
If you go shopping in Regent Street, you hardly buy something like a good piece of furniture.
Imagine if your grandfather had made a loan at that time and bought that property, paying the ridiculous interest rate of 3%.
Of course if he had borrowed the same sum of money and bet on horses the result would have been quite different.
So, if you ever thought of borrowing money, there has never been a better time.
Now you can easily get a Secured Loan between £5,000 and £150,000.
That could allow you to invest money in a new business, a new career, may be in education, or your children's education.
With this inflation rate, you can risk that the money you owe will be worth three times less than what is worth now...
In spite of all what they say, I still believe that, if done in the right way, and for the right goal, borrowing money is still SMART.

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