Market and Investment

Geometrical growth is something not seen in stock, which knows only linear growth. Geometrical growth is much, much faster than linear. If you are one who takes advantage of geometric growth, you will surely be rich. In fact, this is the only way to be rich. Geometric growth separates the rich and the poor, who use linear growth.

The secret power we are talking about is the power of borrowed money, as this is the surest way of them all to get rich. The poor and middle class struggle because they are seeking always to avoid debt, rather than focusing on getting themselves into good debt.

The richest people of all time built their fortunes with good debt; good debt is the force behind every one of their fortunes.

If you are wondering how you, too, can tap into this secret power, you need look no further. Your answer lies in real estate. Real estate is the motherland of borrowed money. In the world of real estate, all you need is 20% of what you want to buy. Sometimes, you need as little as zero; banks are more than eager to give you the rest.

When compared with stock investment, the advantages become quite clear. Twenty-thousand put into stock versus a twenty-thousand down payment on a one-hundred-thousand dollar piece of property is a fine comparison. For simplicity sake, the bank is charging five percent on the loan.

After some time passes, both the investments, for simplicity sake, have increased by the same amount: six percent. The stock, therefore, has made us one-thousand, two-hundred dollars, and the real estate has made six thousand. Of course, you’ll need to subtract the four thousand that you owe the bank for use of its money, but that still leaves you eight hundred dollars ahead of the stock’s earnings.

Our stock has made us only sixty-percent of what our real estate has. The real estate made us ten percent return on investment, but the stock only made us six. Now, you tell me which the better investment is.

Our real estate has earned us far more; the stock only earned sixty-percent of what the real estate has, which is equivalent to six-percent on our original. The real estate made us ten.

Assuming an eight-percent growth rate on a second investment, we will end up with twenty-one-thousand, two-hundred dollars in earnings from our stock, rather than the twenty-four-thousand we would have earned on our real estate.

Investing it all a third time, putting each into solely stock and solely real estate, respectively, and earning an eight-percent interest again, the stock will have ended up making us only thirty-five-percent of the real estate’s earnings.

As time goes on, stock earns more money linearly, but real estate grows more and more.

Real estate truly allows one to take advantage of the power of borrowed money, the core of capitalism. Other people’s money will allow you to become rich.