Sometimes, financial decisions aren't obvious.
The other day, this struck me as I was brainstorming with a millionaire who was planning on buying a new vehicle.
We were talking about where to get the funds from, taxes from various positions and gains and losses and so forth.
I surprised him when I suggested he consider taking out a loan, and not because I didn't want him to take the money out from my management. I never let that impact the advice that I give.
Though, I know that the car companies, especially if you're buying new, often offer very valuable incentives when financing.
This particular client is rather aggressive and would jump at the chance to access low-interest-rate money and take on the risk to hopefully make more with their investments.
Well, we weren't able to get him a 0% car loan as I suspected. These days, they're charging 5.5% for this particular car.
However, he was able to negotiate a $10,000 loan for $4,000 off what he would have otherwise paid at a no-haggle car dealership.
So, he will be paying 5.5% on $10,000 for three months, but then he's going to pay it off and have quite a return on just a shuffling of a little bit of paperwork at the dealership.
The lesson is to try to think outside the box.
Try to not use absolute rules of thumb for investing.
All debt is not bad.
It can further the utility of your financial situation.
Thank you for taking a look!
Tom
This article represents opinions of the author and not those of his firm and are subject to change from time to time and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.