Dangers of using leverage (debt) to buy anything: Wrong path to FIRE (financial independence retire early)…
Be very careful when using leverage… Warren Buffett: “When you combine ignorance with leverage, you get some pretty interesting results.” Recently, I was reading about the whole Evergrande fiasco that is happening in China. For those of you that don’t know, Evergrande is the second largest real estate developer in China. They became a household name (well, at least finance interested people like me) when they failed to make their bond payments that were due in September. Like what has been happening in China for the past decade (or longer), Evergrande has been using tremendous amount of leverage to build more apartments/condos/high end homes. China’s speculative real estate market, where buyers would buy these real estate thinking they’ll always go up, is a common theme found in bubbles. I’ve personally lived through two of these bubbles in my lifetime. One was the ‘dot com bust’ in the early 2000’s, when everyone and their cousin was buying stocks ...