7Mon·

Stacking dividends

In my duo portfolio I borrow the maximum amount at duo this is a Dutch government agency where you can apply for loans for study, this at low interest (2.57%). There are also flexible repayment standards, so you don't have to pay anything off until 2 years after your studies.

I use this money to invest in this ETF, among other things. The amount I borrow is €990.95 per month. So this month I fully bought this etf.

If you like to follow this you can do so on my youtube channel (WegNaarWelvaart) where I will do a monthly update of this portfolio (Dutch).

Let me know what you think of this, I'm curious :)

24.04

JPM Global Equity Premium ETF

Bought x43 at €24.18

€1,039.74

8 Comments

Louis I.@Louisinvestments

7Mon

Nice approach, also box 3 deductible in the future

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WegNaarWelvaart@WegNaarWelvaart1

7Mon

@Louisinvestments haha, is certainly not wrong to bring along indeed! 🙈

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Randolffff@Randolffff

7Mon

Asking for trouble! Borrowing to then invest. There hasn't been a single millionaire who says this is a good tactic. So why should you be the exception?

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WegNaarWelvaart@WegNaarWelvaart1

7Mon

@RalfSchuurmans haha, thanks for your post. There are just quite a lot of people who do this, in fact I would venture to say that almost every millionaire borrows money to invest with. Think real estate investors, and "regular" companies that borrow money from the bank to make returns. As long as the interest you pay is lower than the return you make, borrowing is not bad at all.

A duo loan has 2.57% interest, so you could claim at a (current inflation NL) of 4% that I would gain 1.43% in purchasing power by taking this loan.

I would also like to add a point that debts are deductible in box 3, which means that in the future I will have to pay less tax on my returns, because I have debts.

I am not an exception indeed, I do whatever the rich do. Don't mean to be snide, but often get these responses from people. This is probably because having debts is considered taboo in the Netherlands, except for a house, because working yourself into debt for €500,000 for a place to live in is "sensible".

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Randolffff@Randolffff

6Mon

Simple question: so why do millionaires have paid-off houses? If your theory is correct, everyone would always borrow maximum mortgage to invest. The really rich don't do that! Except the semi-rich who accidentally got it right. There are too many (and more) stories of things going wrong.

Just read Dave Ramsey's survey of 10,000 millionaires. There were exactly zero who borrowed money to invest extra.

You are mathematically correct? However, you forget to include the risk factor I your formula. And that is not explainable mathematically.

5 years down the road and deep debt with DUO. Little ability to buy a house because you also have an outstanding loan with duo. And just at that moment the stock market crashes. I wish you success but you are asking for trouble.

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WegNaarWelvaart@WegNaarWelvaart1

6Mon

@RalfSchuurmans Disagree with you, haha but that's not a big deal opzig. Horizon of 35 years I have as far as me duo loan is concerned, so in that respect the market risk is fine. Depends of course on what you invest in. + I never borrow more than I am working on. That way I can always pay back my loan if necessary. (On a side note, I also invest most of the money I own). We will see.

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Deleted User

3Mon

Comment was deleted

WegNaarWelvaart@WegNaarWelvaart1

3Mon

@Financieel-vrij haha, don't plan to buy a house within now and 10 years, (unless we get a crash in the housing market).😀😉

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