Using Borrowed Money to Make More Money

i am not a financial advisor, and everything written in this post is for recreational purpose and should not be seen as a financial advice.

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Unlike a lot high paid workers who pay high tax, there are a lot of people who do not pay tax even when they make a lot of money or generate a lot of revenue as a business. Some businesses like Amazon even asked for a tax refund in 2018 even when it did not pay anything in federal taxes. A lot of businesses and people are masters in the act using other people's money to make more money.

Real estate is a good example of how people use money lesser than what they have to make more money. This is done by just going to the bank to get a mortgage for a building that you want to purchase for the purpose of leasing. When the bank grant the mortgage, the house is gotten, renovated and then rented out. The money gotten is used to pay for insurance as well as to refinance the mortgage. After the first mortgage has been refinanced, another mortgage can be taken to get another house and so on.

In stocks, people have learnt to trade margin which is using borrowed money from the stock broker to trade. With margin, traders are able to use leveraging to make more money although, leverage can be very risky. People can also invest in ETF with leverage thereby increasing their stakes of investment as well. It is also done in forex markets.

Using other people’s money is a practice done by a lot of investors, traders and businesses, and also not taking your money out of the economy means that taxes aren’t removed and at such investors can keep growing their investment.