Linear growth is seen in stock, not geometrical growth. Geometric growth, unlike linear, is not a straight line; it is much faster. Those who take advantage of geometric growth, when it comes to their money, will be rich. This is what separates the rich and the poor. This is the one and only way to become rich, in fact. Anyone can take advantage of it.
This secret force is the force of borrowed money. Borrowed money is the surest way to become rich. Why is it that the middle class and poor have such little money? It is because they spend their lives fearing debt. Unfortunately, nobody ever taught them that there is such thing as good debt.
The richest people in the history of the world built their fortunes with often times one-hundred-percent borrowed money. If you would like to take advantage of this power, you can simply jump head first into the world of real estate: the best place in the world for borrowed money.
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.
The advantage is quite clear if you compare it with stock investment. Say we put twenty-thousand into stock, and we put twenty-thousand into a one-hundred-thousand dollar property and borrow the other eighty. (The bank is charging us five-percent interest on our loan.)
When compared to other forms of investment, such as stock, the advantage becomes quite clear. Twenty-thousand dollars put into stock will perform worse than twenty-thousand used as a down payment on a one-hundred thousand dollar rental property.
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.
It gets even better. If our investments appreciated eight-percent, our stock would have earned only forty-percent of what our real estate did.
If we make another investment after this, assuming an eight percent growth rate, we will have twenty-one-thousand, two-hundred from stock, but we will have twenty-four-thousand from our real estate.
On a second investment that earns eight-percent also, we will end up with much more from real estate yet again. On a third investment with again eight-percent interest, the stock will have earned us only thirty-five-percent of what the real estate did.
Stock grows linearly, but real estate grows geometrically.
In order to really take advantage of other people's money, one should use real estate, the essence of pyramiding; geometric growth is the fundamental principle of capitalism.
Cody Scholberg, a recognized expert of finance investment, writes for the Investment Properties Guide, the one and only guide to investing and choosing your first rental property.
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