“Why would I want to grow my debt?” you may ask.
Many people at some stage during their life use debt to create wealth. However, to be a successful “debt grower” you first need to change your mindset from thinking debt is negative to thinking of it as a wealth creation vehicle.
Families often wait until their mortgage is paid down in order to begin their journey for financial success.
By biding time, many miss the wealth creation opportunities during those missed years.
Using an investment line of credit they re-borrow the principal of your home loan (their increased equity in the home) and invest it in growth assets. You may even decide to re-borrow and invest your increased equity in each subsequent year until the home loan is repaid.
Once your home loan is repaid, then you may start investing the entire surplus income over the remaining term.
Managed well, debt can increase wealth a lot faster than simply saving to invest, but as with most wealth creation strategies, there are risks to consider. Before making any decisions regarding this strategy, consult with a financial planner.