Why billionaires are taking out mortgages
- by Nischa
Mark Zuckerburg, despite his immense wealth, took a $6 million mortgage to buy his home in California. Beyonce and JayZ financed their $88 million house with a $52 million mortgage. Elon Musk took a $50 million loan against his 5 properties in California.
If debt is so bad, why are these multi millionaires who have the money to pay for things outright taking on more and more of it?
For many of us, debt is seen as a burden. But for the rich, the same concept is referred to as leverage. And the distinction is not just semantic. It represents two entirely different ways of thinking about and using borrowed money.
For the majority of people, debt comes in the form of consumer loans used for purchases that don’t make any money, like, a new TV or a holiday. Whereas on the other side, the rich often use leverage to make more money. And a mortgage is amongst some of the cheapest debt you can get. And so these multi millionaires use borrowed money to buy their homes - which means they can use their money on other assets that have higher returns - essentially turning debt into an asset.
Borrow money to make money, not to lose it.