A Boring Dystopia

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Borrowing money against their stuff to get more stuff to borrow money... (infosec.pub)

submitted 4 days ago by bytesonbike@discuss.online to c/aboringdystopia@lemmy.world

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[–] merc@sh.itjust.works 5 points 4 days ago (1 children)

Your kids inherit the stock at its current value and immediately sell $10M worth to pay off original loan

And the bank says "um, what about the rest?" In the 1970s and early 80s the inflation rate was, at times, above 10%, so your loan's interest rate would have been above that. But say on average the loan's interest rate was 5% per year over 30 years... the bank isn't going to be content for just the original $10M.

[–] WoodScientist@lemmy.world 5 points 3 days ago (1 children)

All that matters is that your portfolio grows faster than the interest rate.

[–] merc@sh.itjust.works 2 points 3 days ago

That's what success looks like. But, you don't know if you're going to be successful when you take out the loan. If there's a market downturn you're on the hook for the loan and your portfolio has crashed. If you sold a few stocks instead of taking out a loan, you're insulated from that possibility.