Best-selling American author and investor Robert Kiyosaki believes using debt to invest is still one of the best ways to grow your wealth.
In a recent exclusive interview with SingSaver, the author of “Rich Dad Poor Dad” believes debt ––or taking on a loan–– provides excellent leverage when it comes to investing.
Kiyosaki, who has been investing for over 40 years, recommends debt as leverage to grow your wealth and ride the market waves as and when they crash and rise.
“I can use debt to buy real estate. Try doing that with a business, it’s almost impossible. Try using debt to buy stocks, almost impossible. You can, but you don’t get it from a bank. A bank won’t loan you money for buying stock. That’s why I love real estate.”
Kiyosaki revealed that during the 2008 U.S. housing sub-prime crisis, he borrowed US$300 million to invest in real estate as prices came crashing down. The U.S. property market in major cities like San Francisco, Chicago and Los Angeles has bounced back and prices have risen 40% to 60% since the crash. The only exception has been Detroit, which remains in the doldrums.
Singapore property market
But does the same hold true when it comes to the Singapore property market?
A raft of government cooling measures –– including Total Servicing Debt Ratio (TDSR) in 2013 and a revision in Additional Buyers Stamp Duty (ABSD) in 2018 -- has reduced rampant property speculation and also dampened the outlook for local property prices.
Median prices for new property launches in Singapore rose sharply between 2009-2010 but then remained stagnant over the next few years until 2018, when prices slowly inched up for mass and mid-market properties. The exception was property launches in prime locations where prices rose the sharpest between 2018-2019. The same can be said for median prices in the resale market.
For 72-year-old Kiyosaki, undertaking a loan for property has two-fold benefits: it becomes a way you can qualify for tax breaks since it gets you property tax reliefs, and you also get a chance to shore up good debt on your end.
That said, in the U.S., federal income tax is up to 39.6% of taxable income, and taxes for federal social insurance programmes such as Social Security, Medicaid, and Medicare are taxed separately. In Singapore, the progressive tax rate for personal income is capped at 22%.
And even you are not sitting on a pile of cash, he believes there are ways to invest in property even if you’re not a millionaire.
Even though he warns a global recession is on the cards, Kiyosaki says there’s still money to be made.
Watch Kiyosaki's Full Interview Below
Kiyosaki will be in Singapore on 23-24 October for the “Masters of the Century” workshop at Suntec Convention Singapore, organised by Success Resources. Tickets on sale now.
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