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Debt has become a dirty word. Everyone tells you that debt is bad and debt will ruin your life.
Most finance books will tell you that debt is the root of all evil and you need to eliminate it at all costs.
Cut down your spending to repay debt as quickly as possible and the ambition of living mortgage free has become the ultimate target of millions of people.
And in a lot of cases that is absolutely true and I completely agree.
Debt can have woeful effects on people’s lives.
It can have severe consequences on psychology and how you feel and high cost debt is an industry that needs to be wiped out and I hope it will.
But in this video I hope to shine a slightly different light on debt and show you that it will be the biggest driver of wealth for most people over time.
And hopefully I can explain how using leverage can bring about a significant amount of advantage and wealth which is exactly what often makes people rich and keeps them rich afterwards.
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https://twitter.com/sashayanshin
Debt has become a dirty word. Everyone tells you that debt is bad and debt will ruin your life.
Most finance books will tell you that debt is the root of all evil and you need to eliminate it at all costs.
Cut down your spending to repay debt as quickly as possible and the ambition of living mortgage free has become the ultimate target of millions of people.
And in a lot of cases that is absolutely true and I completely agree.
Debt can have woeful effects on people’s lives.
It can have severe consequences on psychology and how you feel and high cost debt is an industry that needs to be wiped out and I hope it will.
But in this video I hope to shine a slightly different light on debt and show you that it will be the biggest driver of wealth for most people over time.
And hopefully I can explain how using leverage can bring about a significant amount of advantage and wealth which is exactly what often makes people rich and keeps them rich afterwards.
HOW TO SAVE FOR A HOUSE DEPOSIT & GET A MORTGAGE
https://youtu.be/NY2lkOMFALA
💵 INVESTING PLATFORMS THAT I CURRENTLY USE
SIGN UP TO INVEST WITH ETORO
https://med.etoro.com/B15358_A95689_TClick_SSasha.aspx
67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk. Other fees may apply.
GET A FREE SHARE WORTH UP TO $150 WITH STAKE (UK, Australia, NZ)
https://hellostake.pxf.io/qnA3xq
You will get a free share if you sign up using this link and deposit a minimum of £50.
GET A FREE SHARE WORTH UP TO £200 WITH FREETRADE
(ALSO OFFERS STOCKS & SHARES ISA)
https://magic.freetrade.io/join/sasha-yanshin
You need to sign up and make any deposit to get the free share.
GET A FREE SHARE WORTH UP TO £100 WITH TRADING 212
(ALSO OFFERS STOCKS & SHARES ISA)
Use my link: https://www.trading212.com/invite/FzYbCfTM
You need to sign up and make any deposit to get the free share.
DISCLAIMER: Some of these links may be affiliate links. If you purchase a product or service using one of these links, I will receive a small commission from the seller. There will be no additional charge for you.
DISCLAIMER: I am not a financial advisor and this is not a financial advice channel. All information is provided strictly for educational purposes. It does not take into account anybody's specific circumstances or situation. If you are making investment or other financial management decisions and require advice, please consult a suitably qualified licensed professional.
Hey guys, it's sasha debt has become a dirty word. Everyone out there will tell you that debt is bad and debt will ruin your life. Most finance books will tell you that debt is the root of all evil and you need to eliminate it at all. Costs cut down your spending repay the debt as quickly as possible, and the ambition of living mortgage free has become the ultimate fantasy of almost everyone out there and in lots of cases.
It is absolutely true, and i agree: debt can have woeful effects on people. It can be an incredibly bad thing: it can have severe consequences on people's psychology on their ability to manage their day-to-day life and high-cost debt is an industry that needs to be wiped out once and for all, and i hope it will at some point. But let me shine a slightly different lens on this situation with debt, and let me show you how it can be powerful and how it can actually drive a lot of your wealth in life. In fact how debt will actually probably generate more wealth for you in your life than you might be thinking? First off, just in case, you were wondering the vast majority of rich people become rich by using debt, except if you're rich, you don't call it that, because debt is not a very nice word to use.
Instead, we call it leverage. So when you seek funding for your business, that is going to earn you a lot of money, you are going to get funding that will provide leverage for you to be able to grow your business with somebody else's money that you have borrowed when you want to Invest you don't just put a few hundred quid into your investment app. You know the difference between the monthly income and your monthly outgoings at the end of the month. No, you will have a credit line and you will utilize that credit line in order to leverage your investing positions.
The interesting truth is that rich people become rich and stay rich by using debt, and they use it a lot, and this might go against everything that a lot of people will tell you and what a lot of people actually think, because the truth is rich people. In many cases are far more in debt than poor people, but anyway i digress. More than half of people in uk now go to university, and in order to do so, they get student loans. Now, before anyone mentions that yes, student loans are not really technically a form of debt in the uk, you're just signing up to essentially pay more tax for a period of time after you graduate, but in terms of the principles of what actually happens.
What you're really doing is you're borrowing money from somewhere else to invest in your education and to give you more opportunities in life more quickly. In the united states, people get into a very serious amount of debt in a very real way. In order to go to college and this ridiculous amount of debt at an age when most people haven't actually started their first job, yet is a prime example of using leverage we might not think of it as such, but that is exactly what it is. What would happen if you couldn't borrow the money at that particular point in time, and if your parents didn't happen to be rich, you would have to work a decade or two to go and save up a whole load of money. In order to then invested in your studies and then go to university, but by then you would probably be somewhere in your 40s. You might have children and you definitely won't have that much time to actually benefit from the education. You only have a short amount of time from the moment when you actually graduate at that point to earn the money by the time that you actually then retire so that leverage that allows you to go to university when you're young gives you an enormous upside. Then there's the time when you buy the house, the biggest purchase you're ever going to make in your life is buying property for 99 of people out there there's a whole lot of stress associated with it.
There's a lot of uncertainty. Getting a mortgage is difficult, but by the way i have a whole video where i go through exactly what it is that it will take to go and get a mortgage and exactly how to then save for the deposit so make sure you go and check it Up up here and in the description below after you watch this video mortgages are one of the most powerful ways in which most people will ever make money through leverage, which is exactly why. I get very bemused when i see repeated recommendations from the vast majority of finance gurus out there, that buying property is bad and people should rent instead, because a mortgage will, on average, run somewhere around two percent above the base rate over its lifetime. In some cases, lower and house prices will on average rise and appreciate in value by significantly more than that.
So if you went, and in 1998 bought a 120 000 pounds and paid a whopping, 160 000 pounds in total over the lifetime of your mortgage, including all the interest, then your house could potentially be worth something like 660 thousand pounds today and you will have literally Earned 500 000 pounds through leverage that asset that you now own, your house is yours and you managed to pay a tiny fraction of its actual value at that point in time down the line, because you were able to have access to credit that will be the Largest asset, most people will have at the point when they retire and in many cases it will be the only asset that they own, that they use actual leverage to buy. And that brings about a really interesting question. What if people assessed other things in life using the same approach through the same lens? What if you decided whether or not to invest in future qualifications using leverage? Somehow we are perfectly okay with spending a crazy amount of money going to university, because society has told us that that is okay, but paying 300 pounds for a course at some point in the future. That will give you valuable skills.
Maybe allow you to earn more. Money is often seen as being way too expensive. Using leverage to buy the house that you're going to live in is good and something that every young person in the uk aspires to. But using leverage to buy a second house that you will then have the ability to keep over time, and it will appreciate in value and potentially generate your revenue in the form of rental income. That is something that is generally seen as being very high risk and something that people wouldn't want to do something. Only rich people do yet that property investment - if you were to do it, could well add more to your net worth by the time you retire than the sum of all the wages that you will earn over your working life. Just think about that. For a second now don't take this video the wrong way.
I am by no means in any way whatsoever, encouraging people to go and get themselves into debt - absolutely not categorically. No, but i am trying to shine a light slightly differently to how maybe you would normally think about debt, and i am trying to show that it is not all black and white, as some people think and as a lot of media will portray it. It can be an extremely powerful tool if used right, just as well as it can be an extremely damaging thing and a big burden if it isn't used right. If you guys found this useful, please make sure you go and hit the like button for youtube algorithm.
So that more people can watch this video. Thank you so much for watching. I really appreciate it and, as always i'll see you guys later.
Leverage increases risk. Don't forget to account for that, what ever the investment.
Most people dont use it correctly though, they get a Mortgage then re-morgate several times, increase the time of debt, increase the debt above to get the next purchase as well as adding a little extra to update the new house, cheeky holiday or car as well and before they know it they have had the mortgage for 40 plus years paid 10s of thousands of pounds over what they originally planned
I hope you closed your short on Amigo loans. It’s down to the courts to approve an ALREADY AGREED deal. No amount of tweeting will change that. The irony of your video talking about debt being a bad thing yet you’re against the pay day lender. Have some integrity.
Thanks for the content Sasha.
Could you make a video talking about cryptocurrency taxes, how they work, how much we owe, what’s the best way to keep track of how much tax we owe, etc… thanks.
Imagine you're applying for a mortgage. Should we initially pay the maximum principal possible? Or pay as little as possible and invest the rest?
Crazy how just these minor mindset changes can make all the difference, thanks for the different perspective Sasha, not thought about it entirely like this before
I've kept costs to a minimum and managed to save and invest my entire student loan for the year to the point that I'm not a negative net worth individual even though I'm still in university.
Nothing makes me facepalm more than hearing about someone wanting to overpay their mortgage because Debt Is Bad, and for no other real reason. A mortgage is gained by someone leveraging their ability to earn income and using that fact to borrow an enormous sum of money at an extremely low rate for a long period of time. Money doesn’t get any cheaper! Use it to invest over that same long period of time.
Your ripping off other YouTubers taking there content. What you are not taking from them is all the false information your putting in your videos.
Sasha I want to get in to day trading not forex can you recommend a platform I'm looking at degiro as it has low fees
This is good valuable content, using credit to buy assets that appreciate overtime is leverage 💯
Interesting that us peasants are afraid to get into debts while rich people like to use leverage to fund their businesses. Rich Dad, Poor Dad fame, Robert Kiyosaki encourages leveraging for buy to let property investment.
Love your videos Sasha, Have hated debt for years, i brought a house in 1988, within a year the mortgage rate went to 15% and the monthly payment was 10% higher than my take home pay and the value of the house plummeted………..took 10 years for the price of the house get back to its purchase price, i offloaded and then it trebled in the next 6 years LOL. Having said that, i totally agree with what you say, just buy what ever you can afford with finance but be certain that you can service the debt no matter what is thrown at you
With the potential upcoming dip/crash as the US keep talking about potentially rising interest rates, in your opinion do you think now is a good time to put a sizeable sum in my Global All Cap index fund? Or do you think it's better to leave it where it is in a low interest rate account elsewhere? I feel like it could be earning good amounts of interest, but just cautious of the impending dip and interested in what you would do. Part of me thinks well it could accrue a fair amount of interest until the dip, and then will continue to earn more afterwards anyway.
I remember the first time someone opened my eyes to this way of thinking. To say life changing is not an exaggeration! More great content, well done Sasha. 👍
student debt isnt a tax on students, its a tax on everyone, as they have to earn over a certain amount to pay it back, lots dont earn enough, so the bill is picked up by tax payers as they have to stump up the money before these students earn the money, if people want to go to uni then they should pay for it themselves
the problem isnt debt, the problem is people paying it back, too many live at 100% of their earnings and then cry when they have a blip
Once heard Debt is like fire 🔥 in your home, if used properly it will keep you nice and comfortable. If you disrespect it; it will burn down your home. I love Debt!
Loved this video!
There is a huge psychological shift when we say we are financing’ a project….The ‘D’ word should only be used for describing for purchases that do not create future wealth opportunities. People think nothing of splurging thousands on holidays, cars and clothes……then bemoan that they don’t make enough money 🤷♀️ Catherine
Just want to say I’m so grateful for your videos Sasha. I was struggling to increase my credit score after irresponsible actions in my late teens (credit cards, shopping accounts, CCJs etc), and using your advice I’ve finally been able to get a credit card again (to spend 20% of total limit with, then pay off after statement generates with the direct debit) and it’s inching up slowly using this method. Thank you for helping me build my financial life back again.
As education is an commodity, a degree is no longer the guarantee for a better life. If your degree is not in demand, then you can still end up earning minimum wage with a degree. Bachelor degrees are becoming what A Levels were a few years ago. Many employers are asking for a degree for jobs that don't really warrant it. And as demand and supply matters, you might still need to retrain in the future and have to find the money to do that, as many employers are not providing any help for that. One needs to accept that a degree is a gamble, and there is no guarantee of being better off. So, treat it like a long term investment and examine the labour market carefully.
Interesting video. Just one thing, I think using some visuals to reinforce the points you're making would really help enhance these videos.
I always feel like you should do a wee dance at the end with the closing theme tune, it’s always nostalgically upbeat 😂👌
I think the biggest problem is the lack of education about debt and the many different forms and uses of it.
You only got to look at credit cards, used properly they can be a real benefit (increase your credit score, backup for a one off unexpected cost) but used wrongly they can become a weight dragging people down.
Very well put. Also, you described one of the reasons overpaying your mortgage might not be the best idea, without explicitly stating it. The overpayment will yield more returns if invested over the mortgage term.
I also run the numbers on my situation, repaying my car loan early vs putting that money in my LISA, and the LISA won.
P.S.
Make a video about your LP collection
Didn't look at it this way. The one dislike probably made the rich guy poor from this, who knows lmao.
Great video!:)
Nice little jingle at the end there 🕺🏾
Very interesting topic. I've been looking into debt/leveraging a bit more myself recently and it seems like a very useful financial tool. I guess the element of uncertainty is what puts people off the idea, understandably. Looking at how people buy new cars is what got me thinking about it.
Life hack: Forget about UK, go to university in Denmark where there are no tuition fees for EU students, take a loan to invest in stock market, 3-4 years later you'll get the same diploma, you'll have the same debt and if you're lucky your investments will still value something :))
Great video Sasha! I’ve just finished reading “rich dad, poor dad” and he talked a lot about using debt to generate cash. Never really even thought about it before, I’ve already been told to stay completely away from debt, it’s changed my mindset a lot! Thanks for making a video on this 🙂
As someone who paid his house 30k and saw its value raise to 500k during the Irish boom told me the appreciation of your property doesn't mean anything unless you are selling it to move to a country where that money makes a difference.
In his own words: "yeah, I sell today for 500k, then what? Buy a smaller property for 400k and go through the stress of moving and renovating? Not a chance."
There could be the argument about mortgage payments being lower than rent, and the other argument about not having to slave for 40 years to meet the payments…
Debt to me is only bad if you're using it to buy a depreciating asset like a car.
Great video! I think wealthy people understand debt and can separate it from their personal wealth using Limited companies or other vehicles. A lot of people can't figure out cost (and opportunity cost) when buying a house, the interest they will pay for 30 years, re-mortgaging costs..etc and we need more videos about it. The idea that mortgage interest rates for a 10% deposit is over 3% for a 2 year fixed rate is scary, house prices are inflated and BOE has set rates lower than any time in history, imagine if base rates rise to 1% and how that would change mortgage rates if 0.1% is 3%+!
Very good video. I guess this concept has been known to businessmen for a long time but is only now gathering pace amongst others nowadays. However, the idea of debt has been changed by the ridiculously low interest rates, if the rates went up to 4%, a lot fewer people would buy this concept…
Hi Sasha I have been watching you for the past 6 months and really have gained interest in investing and I just started my Freetrade account last week and made my first few investments I appreciate all the tips you have given to me however I forgot to use your link to join however can we both still get a free share after signing up ?