Expert advice on how you can use debt to invest
Dr Soaries, the founder & CEO of dfreemovement, talks about good debt.
Living a debt-free life is something we all wish and dream about.
However, the tough economic times we live in have contributed to the high amount of debt that the world is currently dealing with.
South Africans are also highly indebted. But did you know that not all debt is bad?
Dr Soaries, the founder & CEO of dfreemovement which empowers individuals and organisations to achieve financial freedom, says there is a way you can use debt to benefit you.
READ: Three smart ways to help you get out of debt sooner
In his latest financial advice video posted on Instagram, the author of 'Say Yes to No Debt: 12 Steps to Financial Freedom', says borrowing money to fund real estate is not a bad idea if you are going to use the property for investment.
"Another form of credit that has helped me personally has been to borrow money to buy real estate," said Dr Soaries.
"If I have $20,000 to invest and I put it in a bank account, I'll get less than 1% interest. If I put it in the stock market, I may experience the volatility of the market and the value go down," he says.
The secret is renting out your property in such a way that your tenants pay your bond.
"If I buy real estate and if it's an investment property, the fact is I'm likely to grow that $20,000 over time while people who rent my property actually pay off my loan."
Soaries explained good debt as "debt that other people pay off on your behalf".
"When you own real estate and you have tenants, those tenants, if you've structured your deal properly, will literally pay off your debt and increase your value. Borrowing money for real estate can be a good way to use credit wisely and strategically."
READ: How to increase your chances of qualifying to buy property
Below is the video:
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Image courtesy of iStock/ @sommart