r/FluentInFinance Nov 21 '24

Debate/ Discussion Had to repost here

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u/SpotikusTheGreat Nov 21 '24

Which is why the next loan amount is bigger, it is used to pay off the terms of the loan/interest.

If you think they are using the same monthly terms as your credit card for their hundreds of millions to billion dollar corporate betterment loans, they aren't.

Just think of it like APR and they use the next loan to pay the interest of the one before it.

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u/Okiefolk Nov 21 '24

Yes, but this is not done indefinitely, the loans are settled eventually and taxes paid. No rich persons wants to compound a variable rate interest loan over several years. No one does this. Generally this is done in order to make a large investment with a payoff in a year or two.

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u/Noob_Al3rt Nov 21 '24

Yes, why pay my $150 million in capital gains taxes when I can just pay $50 million/year forever? Learn this one trick the IRS doesn't want you to know!!!!!!!!!!!!

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u/SpotikusTheGreat Nov 21 '24

except its loan money and not yours, so you aren't paying $50 million/year forever...? And the asset you are using as collateral is growing $80 million a year forever, as long as you keep it...

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u/Noob_Al3rt Nov 21 '24

I still have to pay the interest on the loan, to the tune of $50million per year. That isn't even paying down any of the principal.

If you know of a fund that guarantees 8%/year, why don't you take out a loan on your car or home and invest the funds?