Comment by dyauspitr
4 months ago
The 10% interest they would have to pay on the loans is almost as much as the capital gains would be.
4 months ago
The 10% interest they would have to pay on the loans is almost as much as the capital gains would be.
An ordinary person with decent credit would not pay 10% on a loan.
A reasonably rich person with good credit is paying nowhere near that.
And a very rich person with great credit and who will put their assets up as collateral is paying low single digits in interest, if even.
The feds interest rate is still 4.5% right now. And a lot of companies are preparing for a headwind (which also means very rich people don't want to put assets up). Despite people trying to pretend otherwise, we're not in a very flowing economy right now.
But yes. If you're very ambitious and very rich, you can probably find a decent loan for your idea. This odd economic situation is ripe for uncontested disruption, but has an extremely high cost of entry (hence, being unconstested).
If capital gains tax is 15% that 5% on let’s say $1mil is $50k that is not „almost as much” if you can pay 10%.
You are not getting rich by throwing $50k to trash.
10% compounded which means it gets much closer to 15%
Not going to argue back and forth - as I don’t have any knowledge on those deals.
But I don’t believe they get 10% more like 2-3% and most likely they pay back any amount as soon as their stock value goes up to cover the loan not to accumulate compounding.
They have deals normal people don’t get. For banks those are free and sure money deals as well.