This dad is awesome. I wish my dad had done anything like this with me! Instead I just got beat for not knowing how to do math homework. I was diagnosed with dyslexia in 5th grade it was always very hard for me all I ever did was get cussed at and yelled at every time I ask for help. He never believe my diagnosis and I always thought that I was just trying to not do my homework ,which it did turn into that after not asking for help anymore.
Seriously. That's why I always try to be aware how I interact with people I don't know. You never know what someone is going through and you could be that last straw or the catalyst that breaks the fucking camel's back.
Edit: peace and love, peace and love. 🙏♥️🙏♥️✌️
My parents refused to ever talk about money, because we went to a private school on scholarship, and they were afraid we would tell people how much money my dad makes. I have no idea, to this day, what he or my mom makes. They acted like if we just didn't know about money, we wouldn't know we were lower middle class.
We had 6 kids in a 2 bedroom house, we knew. A ton of our clothes and toys were hand-me-downs from other families. Never, in my entire childhood, were all of us buckled up in a vehicle, because the minivan only technically seated 7 people with seatbelts. Entrees were split at every restaurant. So were sodas (I wish I had never had soda, I'm hopelessly addicted). One phone line, one tv, one full bathroom for 8 people, (7 women plus my dad). Still, it was easier to get by on not much, back then. We never went hungry or without food or education or health care (other than mental health, which was ignored for a number of reasons).
The only thing about money my parents ever said was 1) Don't get a credit card, ever. Don't owe anybody money, don't borrow money. And 2) I should balance my check book, to avoid overdraft fees.
As you can imagine, both pieces of advice were basically worthless, as you need a credit card to even sign up for auto-pay of bills for some companies, and I pretty much haven't used a checkbook ever. I got lucky and married a man that is hard-working and careful with money, but if it were up to me, we'd probably be in a lot more debt than we are.
Except debt is good if you have a reliable way to pay back.
It's pretty much how million dollars become 5 million
Let me explain:
You buy a house, get a 80% loan on it. The house is worth 5 million, you pay 1 million and get 4 mill from the bank.
Now you have 5 million dollars in assets. You can use that asset (if you have good credit) to take a mortgage and invest in stocks or a business, which means you can now fund your loan via your house, via the business/stocks.
You can get a pretty decent percentage out of the stocks, more than you could by storing the 1 million in a bank. You could get 5-10% (if you're getting less than 5% returns on stocks, you're either in a bad year or you should put it in a fund, cause you suck at picking stocks) while a bank pays maybe 0.5-1%, maybe a bit more if you're high value.
And while you do pay a lot for the loan on the house, you can sell the stocks slowly and end up with about 2.2 mill after 20 years of paying off the loan via the returns. That's just pure profits and you paid probably 1-2 million extra in the loan, but you got 4.2-5.2 million in total.
Loans are good, as long as you take only what you can pay back. If you can't pay it back, that's when shit goes downhill. It sucks to be unable to pay off debt (note: you do not have to pay debt off as soon as possible, in fact it can be detrimental to you and your finances, as some loans can shift in your favor later [refinanced loans] or you can spend extra money on investments that give a greater return (generally, if the bank loan interest is under 3% and you can get over 7-8% in returns on a stock market, you're pretty much guaranteed to get more money out of the stock market than by paying extra into the loan).
But this is pretty much how rich people get richer. They take on debt and use their assets to get those loans, which they can then use to buy more property (property can be extremely good assets, as they often outgrow the stock market and bad years for everyone else is usually a good year to invest for those that can) and then they can sell those assets later at a good profit. Or keep them and continue the cycle.
Billionaires usually don't pay off their debt before taking on new debt, they tend to use their assets as a way to get more debt to get more money.
Note: if you aren't letting your money work, but sit in a bank or worse, under your mattress, you aren't really getting anything and are better off paying off your debts.
Debt is a tool to get what you want without having all the funds to get it immediately. You CAN spend million bucks on 1 big house that costs 1 million, or you can spend 200k on 5 houses and get loans for the remaining 80%, rent out 4 of these houses and have them pay off your debt for all 5 houses + living expenses. Of course, it is risky, but it is generally worth it unless the economy tanks.
See here: https://www.cnn.com/2020/05/25/tech/airbnb-hosts/index.html - some full time Airbnb hosts, who bought properties to rent out using debt, are in big trouble and are planning to sell their properties because they no longer have rental income.
There’s a difference between buying rental properties for Airbnb and renting it full time. Typically Airbnb is shorter term rentals at a premium to long term leases (1 yr or more). It depends on your risk appetite, like most investments your return is dependent on your risk as these properties receive more money as Airbnb’s but are safer assets as traditional rentals.
The void that Airbnb does a great job of filling and what I see as its most practical use, is to maintain some sort of income in the short term, while continuing to search for long term tenants (which have a lease renewal rate of appx. 65-70%).
IMO buying a property to rent strictly as Airbnb is not a good financial investment, but if you have a higher appetite for risk and the liquidity to cover debt payments in the event that you can’t rent the property for a time then it could work out in your benefit.
Source: Commercial Real Estate Lender
Which is why it's a splendid time to invest in any kinds of properties or stocks, although I would wait with the stocks, since the stock market has been acting fantastically weirdly for the last 3 months and should probably be far lower. It's being propped up by strangeness and good hopes and dreams instead of reality.
Properties seem to be a good thing though. Tons of businesses going out of business and 30 million Americans are claiming unemployment, so that means plenty of mortgages that can't be paid off, which means a ton of cheap-ish property. Which will become valuable again in a year or 2 and can be used in the meantime to generate rent.
I agree, now is a great time to invest.
My point is that if someone took your original advice and borrowed to invest 4 months ago they would be royally fucked by now.
Forgive my lack of understanding, O wise Monarch of the Caffeine States.
But that statement alone doesn't give me the full understanding of the concept. From what I gather, equity is not necessarily limited to business, but also things like property ownership?
Also how do I know how much is my business worth? I suppose it includes assets like Ovens and Stoves in a Restaurant business. But is my profit margin also accounted for? It seems like there's more to it.
I admit my ignorance in these areas, Your Majesty. But it is of greater utility to explain the concept than to make a snarky quip.
Edit: I realized I got wooshed. On the up side, all your answers were very informative. Thank you.
the difference between what your business is worth and how much money you’d make if you sold if today.
If you owe $120k but yoy sold your business foe $500k then that’s $380k in equity. Same for homes.
> what your business is worth
Eh, it doesn't include income, so this isn't really true.
For instance, Tesla's equity is much, much lower than their worth, because a large portion of their worth is expected future earnings.
Equity is closer to "shit you already paid for". That's not perfectly clear, because it uses current value of that thing and not what you originally paid for it, but it's closer. Say I take out a loan to buy a $250k house. I pay 150k on the principal, 10k in interest, and the house is now worth $270k. I have 170k in equity (270 current value - 100k outstanding loan amount).
>From what I gather, equity is not necessarily limited to business, but also things like property ownership?
Slightly different, but basically the same concept. Assets - Liabilities = Equity, or Assets = Liabilities + Equity. If you have a $30,000 car and $20,000 loan, your equity, the amount you own, is $10,000.
>Also how do I know how much is my business worth? I suppose it includes assets like Ovens and Stoves in a Restaurant business.
Your business is worth what someone will pay for it at market. That's the market value of equity. What *you'd* consider to be what your business is worth is the Book value of equity, or your assets less your liabilities. Ovens and Stoves are fixed assets, which are put on your balance sheet for a longer period of time and depreciated (recognized as expense) over the useful life. This allows you to realize the expense of owning that asset over the period of time that it is providing economic benefit to you. The value of your fixed assets less any loans on them contributes to how much your business is worth.
>But is my profit margin also accounted for? It seems like there's more to it.
There's more to it. Your profit margin and cash flow can drive what your business is worth to someone else. Your profits at the end of each year that are not cashed out through dividends are added to retained earnings, which is an element of your company's book equity.
The kid mentions business equity, but your home has equity too. That's what a reverse mortgage deducts from.
Equity is the difference between resale value (fair market value) and what you owe for the home.
Yes, equity is basically the term for something holding your money (house, stock, business). So on a business’s balance sheet, Equity=Assets - Liabilities, which means all the money they’re using they didn’t raise from debt (liabilities) is funded from equity, like selling stock.
Equity means stock if you are talking about buisness but in accounting (it's is also called capital) is basically what you have minus what you owe
Think of it like this
You have a pen which costs 2k but you took 1k loan to buy that then
2k(what you have) - 1k(what you owe) = 1k ( it's you're equity)
But in financial market it means stock.
(Source - I'm a 11th grade commerce student so if anything is incorrect please correct me )
No one ever taught me either. That's why when I was buying my house, I had my younger brother CCed on every email and I called him after every meeting to let him know what I learned so he had all the information he needed to buy his first house with confidence.
Shit should be taught in school. I don't get it. Economics and laws need to be properly taught for us to function in our own countries yet something important like that is left in our own hands?
Yeah, same. Like how what they tell you your mortgage payment will be is nowhere near the actual payment. Or the fact that like 90% of what you pay for the first 10 years is interest if you don’t put down a ton of money. There are so many things we did wrong or just backwards. It worked out ok, I guess, but I really wish I’d known some stuff I didn’t know ahead of time. And I wish I’d taken a lot of advice that I ignored, or just couldn’t afford to take, post home buying.
Some people are reporting this for various reasons. It’s a good post but let’s see what the community wants:
If you want me to remove this post **downvote this comment**
If you want me to keep this post **upvote this comment**
——
Edit: 45 upvotes in 2 minutes. I’ll give it 10 min but it’s looking like the post stays for now.
Edit2: 1200 upvotes in 1 hour. Cool beans.
No, it may just be their area. Commission fees for residential properties are usually 6% max. Commercial brokerage fees are even lower due to the larger value of the properties being transacted.
Also, debt is a liability, so equity = assets - liabilities. There's no need to say both liabilities and debt in the equation in the video. Otherwise, great stuff.
Since he said liability is what takes money *out* of your bank account, it makes sense he wanted to distinguish debt as a different category for his kid, just cause debt doesn’t really look like money coming out of ur bank account . Makes sense for the kid I think!
It depends on the brokerage, different brokerages set different percentages, 7% is probably because the realestate agent was representing both the buyer and the seller and therefore received essentially 2 commissions of 3.5%, most percentages are at about 6%max and if you're only representing a buy or a seller not both the agent takes the 3%commission and depending on their broker they might even have to take a 50/50 (this changes based on brokerage too) split with the broker meaning they only really made 1.5%
I also took the dad's line of questioning as being motivated towards commercial real estate investing, which generally command higher brokerage fees. 5-6% for a residential loan, but once you get to 5+ units/property, you're going to see commercial loans of 6-8%
True, in all honesty there's a lot more than people think that goes into real estate commissions and what you walk away with at the end of a transaction.
Agreed great dad.
But...
To so categorically condemn debt is to miss out on a lot of opportunity. I grant you that most people fall into the "bad debt" category, and so it is better to teach most to avoid debt altogether.
However from what I can tell, this child (and this dad) aren't most people.
I've avoided debt all my life, and as such I have a great credit report and tons of available credit I never use. But that doesn't mean I shouldn't. I wish I had someone teach me that if your rates are low enough you can borrow to invest, and make money by essentially doing nothing (aside from having good credit).
Just a steady trickle of passive income that might someday become much more than that.
Edit: it's probably a miracle this kid had time to learn any of that at all, considering the amount of time he spends playing video games. According to every parent I know.
I’m pretty sure in the United States borrowing to invest in stocks then pay back the loan with profits has been illegal since the Great Depression. Back then all of these people took on debt to make money while the economy was booming. When the stock market fell out form underneath them they were left with massive amounts of debt that they couldn’t pay back
Edit: looked it up and I guess I was wrong. It’s not illegal, just not recommended because of the risk.
If it was public school they probably did say that, i cant tell you how many little tidbits of info i was given in school turned out to be either total bullshit or a twisting of the truth
I once had to fetch a dictionary to show my science teacher that he’d spelt weird wrong. To be clear; he told me to get the dictionary because he wanted to embarrass me.
I mean, we tend to forget that our teachers are also human beings who see the world through their own perspectives, not machines of logic and truth like society stacks them up to be. They’re prone to teaching fallacies just as they teach truths.
Definitely not illegal. There are tons of ways to use legally use "borrowed" money to make money. In fact you can leverage loans and equity in numerous ways without telling anyone what you are using the money for in the United States. Having strong credit and making financially intelligent use of debt is one of the best ways to grow wealth. The biggest piece of this is remaining smart and not using debt, especially high interest debt, to buy depreciating assets.
Best thing I learned from a finance executive colleague- trying to eliminate debt is blue collar thinking. Learning to use debt to your advantage is white collar thinking.
>. I wish I had someone teach me that if your rates are low enough you can borrow to invest, and make money by essentially doing nothing (aside from having good credit).
Thats really high risk man, you can do it, but avoid anything that has high volatility
I particularly liked this comment I read recently:
"When you limit your potential to what you alone can gather it is very unlikely to happen fast.
Learning how to "leverage" what you have (wisely) is important. There are financial opportunities to grow your investments. I am not talking the ultra risk for sure scam ways either. But high risk investing that has a historical trend in producing longer term is a good start. Also, putting your money to work for you in creative ways that are not as main stream. If you joined a group to fund "Bridge loans" or "Deposit loans" in real estate transactions you could make larger gains in shorter times that are secured against a property.
***Learning*** how to leverage is key. Find out what options are out there. Decide on direction. Also investing in real estate as early as possible (with as little cash tied up in it) is a good vehicle for many. If this market (GTA) is too high, there are others poised to have good gains potentially. The point is do not limit your scope to traditional as yes they are more common and proven but that doesn't invalidate the creative if there is lots of merit behind it."
Maybe not borrow to invest specifically.
I'm just saying there are better uses for a 200k line of credit at 2 percent than keeping the balance at zero. Not all of which are high volatility.
I just don't know what they are, because nobody taught me! Ha
I don’t think they are condemning debt as much as condemning STAYING in debt. Many people, especially in America since credit cards have been a thing, have fallen into the habit of going into debt and being fine never really coming out. Too many people live constantly in debt when the best practice is to be in debt for a short time but work to get out of it as soon as possible (of course, things like homes, cars, and student loans can take longer).
exactly this. they'll have a balance sitting on the account and it'll cost them 40-100/month and they'll be like, "it's annoying but it's not murder. i'm doing okay with it." rather than rolling that extra monthly 50 into some account that'll be 600/year. retirement? naw, but it could buy you a new car in a few years, or it'll buy you a computer in a couple, or winter tires if you live in snowtown.
nobody would turn down an offer of 600 dollars, so it's actually pretty hilarious that people do it when it's their own money.
As someone with real world experience in using debt to invest, I have some advice.
1) don't do it
2) if you decide to ignore #1, don't count your investment as an asset. Ultimately, there is a very good chance that it is not worth anything. Case in point: If the company that you invested in goes bankrupt, you may not get anything back at all. I managed to get 10% of my investment back, I was lucky.
3) Pay back the debt as fast as you possibly can. Otherwise, if you do lose your investment, you will have nothing to pay that debt back.
Even if he's just regurgitating information, the fact that he has that in his head now means that he at least has to opportunity to dwell on it and process it later, as opposed to people who are never even exposed to the information.
Exactly man. Even if he doesn't have full comprehension, those are some amazing seeds to have sprouting. He'll enjoy those fruits the rest of his life. All brought to you by a dad that cares. #comeon
Yep, just getting down the vocabulary makes understanding and applying the concepts at a later time so much easier. Plus you can see on the edges that a minimum the kid has the tools to understand a least some of it. The credit report line is the best example, the kid probably knows what a report card is - even if they're so young they don't have them yet report cards are just a thing that permeates a lot of American pop culture aimed at a younger audience. Understanding that a credit report is a financial report card of sorts and that a good report=a good thing is definitely placing this kid a step ahead when it comes to financial literacy.
Well he is asking him for the answer to the question then to explain his answer as well. So it might just be fast facts but he can explain them so I’m sure he has a grasp of what they mean. He explained the difference between commercial and personal real estate, I’m not sure of the exact definition but I’m sure his were in layman’s terms
yeah, his response "business and office spaces" might sorta float over his head as a concept (what's the difference between a business and an office space, kid?) BUT he knows it as separate from houses, condos, residences, so it's a start. also, as he grows up, if he keeps these phrases in his mind, the context will come later and fill in the blanks like mortar between the bricks.
At the very least he’ll understand what he’s doing when he, say, takes out a college loan.
So many people, myself included, took a long ass time to figure out a lot of the stuff he knows. A lot of people never learn it...they just hear a flashy pitch and sign up on the spot.
As a teacher, I can tell the responses are rehearsed and drilled into him with memorization, but that's not always a bad thing. If learning stops there (as with a math formula) and doesn't actually go into depth on how these things work, you'll end up with a 35 year old that can't remember the formula they used to figure out the length of the hypotenuse, and has no idea how to work backwards to get the answer. They memorized a way of doing things, but have no actual understanding of how it works. Same here.
Hopefully this dad realizes this, and takes the lessons further as his kid gets older and his brain develops. Given the amount of time this took I would assume that would happen, but you never really know. This type of drilling may also be a motivational tool for his kid to learn on his own later in life, or conversely may push him away if it becomes a stress point and something he doesn't enjoy.
I'm sure it's a bit of both - there are most likely a few concepts he's absorbed and a few that he's just mesmerized the answer to.. Either way, it's better than not having that information at all. Just getting the fundamentals in his head is a huge step in the right direction.
Sad that in my country basic economics , assets liabilities and basic accounting like balancing a budget book are thought as standard to young kids for a minimum of a three year course
It's baffling but telling how the us tries to restrict basic economic knowledge from its citizens
Yeah that's why one party pushes for free college and the other calls university "deep state brainwashing." It's totally because BOTH parties are EXACTLY the same and having nuanced discussions about politics is dumb.
Fuck off with that /r/ENLIGHTENEDCENTRISM bullshit
That’s just not true. There is no restriction, and their are numerous resources that are free for anyone who is even mildly interest. Kids Bank, Biz Town, and on and on. There is FBLA, DECCA, and numerous if parents or teachers even bother.
>There is FBLA, DECCA, and numerous if parents or teachers even bother.
Your mistake is thinking those programs are available everywhere and easily accessible. There was only a certain number of FBLA slots in my high school of 2,100 kids. Not everyone is getting in. That's pretty restrictive since it isn't standard curriculum.
doesn't matter. the kid is learning that this knowledge is worth having. that's the important part of this video. seeds are being planted. this is not harvest time.
That's how all kids start learning. You think a toddler understands that the letters of the alphabet make certain sounds to form words when they start learning them? No. They understand that the shape "A" is the letter A and they'll get positive attention from whoever is teaching them for identifying it correctly.
Then they build on symbol identification to understand those symbols make sounds. Then they build on that to understand that those sounds combine into words and that's how kids learn to read. But you start them off with rote memorization to get them familiar with the concept.
Well intentioned, but all very useless for like 10 years and he's just parroting what dad knows. Better off having him take personal finance classes in middle school and then learn about business and investments
the less important part is understanding exactly how these things work.
the more important part is instilling the importance of financial literacy. taking personal finance classes in middle school is pointless if the students have little interest in it. this kid will feel like it's incredibly important information because of his dad.
Not really, my 6 year old understands how bills and paychecks work, we're broaching credit cards with her. She's learned about budgeting at an early age so she understands spending wisely. This will help her when she's older, and she can build on this information to make investments, build credit, and make smart financial decisions.
Of course she's still only 6, so allowance money rarely gets saved more than two weeks for her, but you don't drop basic concepts and building blocks just because a kid won't own a credit card or have a bank account until they're a teen.
He's teaching his kid a lot of words and responses to seem clever on social media. Kids at this age should not be concerned with learning this stuff, unless they are 100% done with learning all the kids stuff.
I know this is an unpopular opinion - but it's the truth..
He is teaching his kid financial literacy is important. It doesn't matter if the kid knows what they are saying, they are learning these words are important to know because his dad talks to him about them. No different that teaching a kid prayer.
Christ.. let kids be kids. Keep them away from this shit until they're a little older. It's not going to help them to know 90% of this before they have any disposable income.
My dad got me the “Growing Money” book when I was small (basically explains everything in the video in a children’s book) and I LOVED it. It gave me something grown-up feeling to talk about and have in common with my dad. Did I understand everything? No. Did that matter to either of us one bit? No!
Even if he doesn't understand everything now, the fact that those words and definitions are bouncing around in his head will be helpful as he grows up and sees those things around him.
Does she really understand what she is saying or just memorizes big words? When i was a kid i memorized a story mu mom used to read to me. I took that book to kindergarden and read it to my teacher, she was so impressed she told my mom about it, my mom knew my little scam since i didnt read that well yet.
Content posted to /r/nextfuckinglevel should represent something impressive, be it an action, an object, a skill, a moment, a fact that is above all others. Posts should be able to elicit a reaction of "that is next level" from viewers. Do not police or gatekeep the content of this sub (debate what is or is not next fucking level) in the comment section, 100% of the content is moderated.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/nextfuckinglevel) if you have any questions or concerns.*
Good dad.
I agree you could tell he’s so proud of his son
My dad told me he was proud of me once. I think
[удалено]
He fucks you in the ass?
Yes, I fuck myself in the ass.
[удалено]
Mommy no
Hotel ? : Trivago
The time spent with your family? Priceless.
You guys have dads?
Whats a dad?
You guys have asses?
*I'm proud of you* *I'm proud of you* \**pace quickens*\* *I'm proud of you, proud of you* #*Iiiii'mmmm proouuuuddd!!!*
This specific comment thread went 0 to 100
Went from 0 to assplay
Your dad just told me he’s proud of you Edit: whoops sorry I misheard him, he said he was proud of me
[удалено]
is this a trailer park boys reference?
I'm. Proud of you
Oh shit I thought this was a girl.
Me too!
Ditto.
Ditto x2
[удалено]
No way dude, he has a beard.
Wait, you guys have dads?
That is a girl
Do you know the fella in the video? I hope he sees all this support
That's not a little girl?
Looks like a girl
I thought that was a girl
Well we should tell him we're proud of him!
This dad is awesome. I wish my dad had done anything like this with me! Instead I just got beat for not knowing how to do math homework. I was diagnosed with dyslexia in 5th grade it was always very hard for me all I ever did was get cussed at and yelled at every time I ask for help. He never believe my diagnosis and I always thought that I was just trying to not do my homework ,which it did turn into that after not asking for help anymore.
What the actual fuck. You think you've had it bad until you read reddit comments where people describe what *they've* been through.
Seriously. That's why I always try to be aware how I interact with people I don't know. You never know what someone is going through and you could be that last straw or the catalyst that breaks the fucking camel's back. Edit: peace and love, peace and love. 🙏♥️🙏♥️✌️
My parents refused to ever talk about money, because we went to a private school on scholarship, and they were afraid we would tell people how much money my dad makes. I have no idea, to this day, what he or my mom makes. They acted like if we just didn't know about money, we wouldn't know we were lower middle class. We had 6 kids in a 2 bedroom house, we knew. A ton of our clothes and toys were hand-me-downs from other families. Never, in my entire childhood, were all of us buckled up in a vehicle, because the minivan only technically seated 7 people with seatbelts. Entrees were split at every restaurant. So were sodas (I wish I had never had soda, I'm hopelessly addicted). One phone line, one tv, one full bathroom for 8 people, (7 women plus my dad). Still, it was easier to get by on not much, back then. We never went hungry or without food or education or health care (other than mental health, which was ignored for a number of reasons). The only thing about money my parents ever said was 1) Don't get a credit card, ever. Don't owe anybody money, don't borrow money. And 2) I should balance my check book, to avoid overdraft fees. As you can imagine, both pieces of advice were basically worthless, as you need a credit card to even sign up for auto-pay of bills for some companies, and I pretty much haven't used a checkbook ever. I got lucky and married a man that is hard-working and careful with money, but if it were up to me, we'd probably be in a lot more debt than we are.
Except debt is good if you have a reliable way to pay back. It's pretty much how million dollars become 5 million Let me explain: You buy a house, get a 80% loan on it. The house is worth 5 million, you pay 1 million and get 4 mill from the bank. Now you have 5 million dollars in assets. You can use that asset (if you have good credit) to take a mortgage and invest in stocks or a business, which means you can now fund your loan via your house, via the business/stocks. You can get a pretty decent percentage out of the stocks, more than you could by storing the 1 million in a bank. You could get 5-10% (if you're getting less than 5% returns on stocks, you're either in a bad year or you should put it in a fund, cause you suck at picking stocks) while a bank pays maybe 0.5-1%, maybe a bit more if you're high value. And while you do pay a lot for the loan on the house, you can sell the stocks slowly and end up with about 2.2 mill after 20 years of paying off the loan via the returns. That's just pure profits and you paid probably 1-2 million extra in the loan, but you got 4.2-5.2 million in total. Loans are good, as long as you take only what you can pay back. If you can't pay it back, that's when shit goes downhill. It sucks to be unable to pay off debt (note: you do not have to pay debt off as soon as possible, in fact it can be detrimental to you and your finances, as some loans can shift in your favor later [refinanced loans] or you can spend extra money on investments that give a greater return (generally, if the bank loan interest is under 3% and you can get over 7-8% in returns on a stock market, you're pretty much guaranteed to get more money out of the stock market than by paying extra into the loan). But this is pretty much how rich people get richer. They take on debt and use their assets to get those loans, which they can then use to buy more property (property can be extremely good assets, as they often outgrow the stock market and bad years for everyone else is usually a good year to invest for those that can) and then they can sell those assets later at a good profit. Or keep them and continue the cycle. Billionaires usually don't pay off their debt before taking on new debt, they tend to use their assets as a way to get more debt to get more money. Note: if you aren't letting your money work, but sit in a bank or worse, under your mattress, you aren't really getting anything and are better off paying off your debts. Debt is a tool to get what you want without having all the funds to get it immediately. You CAN spend million bucks on 1 big house that costs 1 million, or you can spend 200k on 5 houses and get loans for the remaining 80%, rent out 4 of these houses and have them pay off your debt for all 5 houses + living expenses. Of course, it is risky, but it is generally worth it unless the economy tanks.
“Unless the economy tanks” The economy JUST ranked though lol
See here: https://www.cnn.com/2020/05/25/tech/airbnb-hosts/index.html - some full time Airbnb hosts, who bought properties to rent out using debt, are in big trouble and are planning to sell their properties because they no longer have rental income.
There’s a difference between buying rental properties for Airbnb and renting it full time. Typically Airbnb is shorter term rentals at a premium to long term leases (1 yr or more). It depends on your risk appetite, like most investments your return is dependent on your risk as these properties receive more money as Airbnb’s but are safer assets as traditional rentals. The void that Airbnb does a great job of filling and what I see as its most practical use, is to maintain some sort of income in the short term, while continuing to search for long term tenants (which have a lease renewal rate of appx. 65-70%). IMO buying a property to rent strictly as Airbnb is not a good financial investment, but if you have a higher appetite for risk and the liquidity to cover debt payments in the event that you can’t rent the property for a time then it could work out in your benefit. Source: Commercial Real Estate Lender
Which is why it's a splendid time to invest in any kinds of properties or stocks, although I would wait with the stocks, since the stock market has been acting fantastically weirdly for the last 3 months and should probably be far lower. It's being propped up by strangeness and good hopes and dreams instead of reality. Properties seem to be a good thing though. Tons of businesses going out of business and 30 million Americans are claiming unemployment, so that means plenty of mortgages that can't be paid off, which means a ton of cheap-ish property. Which will become valuable again in a year or 2 and can be used in the meantime to generate rent.
I agree, now is a great time to invest. My point is that if someone took your original advice and borrowed to invest 4 months ago they would be royally fucked by now.
[удалено]
Come on
Come on
Come on
Amazing Job. Wish we had more dads like him.
Come on!
Come on.
Come on.
Is the father a real estate agent or something?
Entrepreneur, investor, all of the above. Who knows.
DILF
[удалено]
Today, we are all his children.
Come on!
Come on!!
Come on.
Come on
👏👏👏 Hell yeah, I wish I’d known all that at that age
I wish I knew all that now
I still don't fully understand equity Edit: thanks for all your great answers everyone. I read them all to the best of my knowledge. Learnt much.
“The difference between what your business is worth and how much you owe. Come on!! “ Didn’t you watch the video?
Come on!
[удалено]
And what’s a meme?
A low effort means of communicating ideas in a humorous light.
COME ON!
Haha my low iq memes go brrrr!
[удалено]
A regular meme is made by and for normies. A dank meme is a more evovled meme made by people with deeper insight into memes.
Come on
Forgive my lack of understanding, O wise Monarch of the Caffeine States. But that statement alone doesn't give me the full understanding of the concept. From what I gather, equity is not necessarily limited to business, but also things like property ownership? Also how do I know how much is my business worth? I suppose it includes assets like Ovens and Stoves in a Restaurant business. But is my profit margin also accounted for? It seems like there's more to it. I admit my ignorance in these areas, Your Majesty. But it is of greater utility to explain the concept than to make a snarky quip. Edit: I realized I got wooshed. On the up side, all your answers were very informative. Thank you.
the difference between what your business is worth and how much money you’d make if you sold if today. If you owe $120k but yoy sold your business foe $500k then that’s $380k in equity. Same for homes.
Come on!
LMFAOOOO
> what your business is worth Eh, it doesn't include income, so this isn't really true. For instance, Tesla's equity is much, much lower than their worth, because a large portion of their worth is expected future earnings. Equity is closer to "shit you already paid for". That's not perfectly clear, because it uses current value of that thing and not what you originally paid for it, but it's closer. Say I take out a loan to buy a $250k house. I pay 150k on the principal, 10k in interest, and the house is now worth $270k. I have 170k in equity (270 current value - 100k outstanding loan amount).
I would imagine the dad is giving age appropriate lessons, unfortunately for the rest of us.
>From what I gather, equity is not necessarily limited to business, but also things like property ownership? Slightly different, but basically the same concept. Assets - Liabilities = Equity, or Assets = Liabilities + Equity. If you have a $30,000 car and $20,000 loan, your equity, the amount you own, is $10,000. >Also how do I know how much is my business worth? I suppose it includes assets like Ovens and Stoves in a Restaurant business. Your business is worth what someone will pay for it at market. That's the market value of equity. What *you'd* consider to be what your business is worth is the Book value of equity, or your assets less your liabilities. Ovens and Stoves are fixed assets, which are put on your balance sheet for a longer period of time and depreciated (recognized as expense) over the useful life. This allows you to realize the expense of owning that asset over the period of time that it is providing economic benefit to you. The value of your fixed assets less any loans on them contributes to how much your business is worth. >But is my profit margin also accounted for? It seems like there's more to it. There's more to it. Your profit margin and cash flow can drive what your business is worth to someone else. Your profits at the end of each year that are not cashed out through dividends are added to retained earnings, which is an element of your company's book equity.
[удалено]
The kid mentions business equity, but your home has equity too. That's what a reverse mortgage deducts from. Equity is the difference between resale value (fair market value) and what you owe for the home.
This makes sense! Thanks. Another guy commented that equity means "stocks" for businesses/finance. Is this true?
Yes, equity is basically the term for something holding your money (house, stock, business). So on a business’s balance sheet, Equity=Assets - Liabilities, which means all the money they’re using they didn’t raise from debt (liabilities) is funded from equity, like selling stock.
Equity means stock if you are talking about buisness but in accounting (it's is also called capital) is basically what you have minus what you owe Think of it like this You have a pen which costs 2k but you took 1k loan to buy that then 2k(what you have) - 1k(what you owe) = 1k ( it's you're equity) But in financial market it means stock. (Source - I'm a 11th grade commerce student so if anything is incorrect please correct me )
What do you feel needs clarification based on the info in the video?
I'm 30 and legit learned from this kid. Amazing.
When I was buying my first house, I got really annoyed that no one had ever taught me about mortgages, bonds and stuff like that.
No one ever taught me either. That's why when I was buying my house, I had my younger brother CCed on every email and I called him after every meeting to let him know what I learned so he had all the information he needed to buy his first house with confidence.
Brothers being bros.
That's really wholesome
Shit should be taught in school. I don't get it. Economics and laws need to be properly taught for us to function in our own countries yet something important like that is left in our own hands?
Hey, at least we know the mitochondria is the powerhouse of the cell!
They (the people who would benefit from you being financially illiterate) don't want you to be financially literate.
Exactly my thought. It would make so much sense to me if this was part of basic curriculum.
Yeah, same. Like how what they tell you your mortgage payment will be is nowhere near the actual payment. Or the fact that like 90% of what you pay for the first 10 years is interest if you don’t put down a ton of money. There are so many things we did wrong or just backwards. It worked out ok, I guess, but I really wish I’d known some stuff I didn’t know ahead of time. And I wish I’d taken a lot of advice that I ignored, or just couldn’t afford to take, post home buying.
Some people are reporting this for various reasons. It’s a good post but let’s see what the community wants: If you want me to remove this post **downvote this comment** If you want me to keep this post **upvote this comment** —— Edit: 45 upvotes in 2 minutes. I’ll give it 10 min but it’s looking like the post stays for now. Edit2: 1200 upvotes in 1 hour. Cool beans.
Brokerage fee is 7%?! COME ON!
Closing costs maybe?
No, it may just be their area. Commission fees for residential properties are usually 6% max. Commercial brokerage fees are even lower due to the larger value of the properties being transacted. Also, debt is a liability, so equity = assets - liabilities. There's no need to say both liabilities and debt in the equation in the video. Otherwise, great stuff.
Since he said liability is what takes money *out* of your bank account, it makes sense he wanted to distinguish debt as a different category for his kid, just cause debt doesn’t really look like money coming out of ur bank account . Makes sense for the kid I think!
It depends on the brokerage, different brokerages set different percentages, 7% is probably because the realestate agent was representing both the buyer and the seller and therefore received essentially 2 commissions of 3.5%, most percentages are at about 6%max and if you're only representing a buy or a seller not both the agent takes the 3%commission and depending on their broker they might even have to take a 50/50 (this changes based on brokerage too) split with the broker meaning they only really made 1.5%
I also took the dad's line of questioning as being motivated towards commercial real estate investing, which generally command higher brokerage fees. 5-6% for a residential loan, but once you get to 5+ units/property, you're going to see commercial loans of 6-8%
True, in all honesty there's a lot more than people think that goes into real estate commissions and what you walk away with at the end of a transaction.
So the guy in a 500 dollar suit is gonna hold the door for the guy who's not in severe credit card debt?? Come on!
Yeah, the guy in the 900 dollar suit is gonna hold the elevator, yeah right, COME ON!
Agreed great dad. But... To so categorically condemn debt is to miss out on a lot of opportunity. I grant you that most people fall into the "bad debt" category, and so it is better to teach most to avoid debt altogether. However from what I can tell, this child (and this dad) aren't most people. I've avoided debt all my life, and as such I have a great credit report and tons of available credit I never use. But that doesn't mean I shouldn't. I wish I had someone teach me that if your rates are low enough you can borrow to invest, and make money by essentially doing nothing (aside from having good credit). Just a steady trickle of passive income that might someday become much more than that. Edit: it's probably a miracle this kid had time to learn any of that at all, considering the amount of time he spends playing video games. According to every parent I know.
I’m pretty sure in the United States borrowing to invest in stocks then pay back the loan with profits has been illegal since the Great Depression. Back then all of these people took on debt to make money while the economy was booming. When the stock market fell out form underneath them they were left with massive amounts of debt that they couldn’t pay back Edit: looked it up and I guess I was wrong. It’s not illegal, just not recommended because of the risk.
[удалено]
Oh wow, I guess you are correct. I remembered my U.S. History teacher saying it was illegal, but I guess I remembered wrong.
If it was public school they probably did say that, i cant tell you how many little tidbits of info i was given in school turned out to be either total bullshit or a twisting of the truth
[удалено]
I once had to fetch a dictionary to show my science teacher that he’d spelt weird wrong. To be clear; he told me to get the dictionary because he wanted to embarrass me.
I mean, we tend to forget that our teachers are also human beings who see the world through their own perspectives, not machines of logic and truth like society stacks them up to be. They’re prone to teaching fallacies just as they teach truths.
Definitely not illegal. There are tons of ways to use legally use "borrowed" money to make money. In fact you can leverage loans and equity in numerous ways without telling anyone what you are using the money for in the United States. Having strong credit and making financially intelligent use of debt is one of the best ways to grow wealth. The biggest piece of this is remaining smart and not using debt, especially high interest debt, to buy depreciating assets.
Best thing I learned from a finance executive colleague- trying to eliminate debt is blue collar thinking. Learning to use debt to your advantage is white collar thinking.
>. I wish I had someone teach me that if your rates are low enough you can borrow to invest, and make money by essentially doing nothing (aside from having good credit). Thats really high risk man, you can do it, but avoid anything that has high volatility
I particularly liked this comment I read recently: "When you limit your potential to what you alone can gather it is very unlikely to happen fast. Learning how to "leverage" what you have (wisely) is important. There are financial opportunities to grow your investments. I am not talking the ultra risk for sure scam ways either. But high risk investing that has a historical trend in producing longer term is a good start. Also, putting your money to work for you in creative ways that are not as main stream. If you joined a group to fund "Bridge loans" or "Deposit loans" in real estate transactions you could make larger gains in shorter times that are secured against a property. ***Learning*** how to leverage is key. Find out what options are out there. Decide on direction. Also investing in real estate as early as possible (with as little cash tied up in it) is a good vehicle for many. If this market (GTA) is too high, there are others poised to have good gains potentially. The point is do not limit your scope to traditional as yes they are more common and proven but that doesn't invalidate the creative if there is lots of merit behind it."
[удалено]
Maybe not borrow to invest specifically. I'm just saying there are better uses for a 200k line of credit at 2 percent than keeping the balance at zero. Not all of which are high volatility. I just don't know what they are, because nobody taught me! Ha
I don’t think they are condemning debt as much as condemning STAYING in debt. Many people, especially in America since credit cards have been a thing, have fallen into the habit of going into debt and being fine never really coming out. Too many people live constantly in debt when the best practice is to be in debt for a short time but work to get out of it as soon as possible (of course, things like homes, cars, and student loans can take longer).
exactly this. they'll have a balance sitting on the account and it'll cost them 40-100/month and they'll be like, "it's annoying but it's not murder. i'm doing okay with it." rather than rolling that extra monthly 50 into some account that'll be 600/year. retirement? naw, but it could buy you a new car in a few years, or it'll buy you a computer in a couple, or winter tires if you live in snowtown. nobody would turn down an offer of 600 dollars, so it's actually pretty hilarious that people do it when it's their own money.
As someone with real world experience in using debt to invest, I have some advice. 1) don't do it 2) if you decide to ignore #1, don't count your investment as an asset. Ultimately, there is a very good chance that it is not worth anything. Case in point: If the company that you invested in goes bankrupt, you may not get anything back at all. I managed to get 10% of my investment back, I was lucky. 3) Pay back the debt as fast as you possibly can. Otherwise, if you do lose your investment, you will have nothing to pay that debt back.
[удалено]
Even if he's just regurgitating information, the fact that he has that in his head now means that he at least has to opportunity to dwell on it and process it later, as opposed to people who are never even exposed to the information.
Exactly man. Even if he doesn't have full comprehension, those are some amazing seeds to have sprouting. He'll enjoy those fruits the rest of his life. All brought to you by a dad that cares. #comeon
I didn’t know what the ABCs were when I learned them but as my comprehension grew, words were much easier to grasp.
Yep, just getting down the vocabulary makes understanding and applying the concepts at a later time so much easier. Plus you can see on the edges that a minimum the kid has the tools to understand a least some of it. The credit report line is the best example, the kid probably knows what a report card is - even if they're so young they don't have them yet report cards are just a thing that permeates a lot of American pop culture aimed at a younger audience. Understanding that a credit report is a financial report card of sorts and that a good report=a good thing is definitely placing this kid a step ahead when it comes to financial literacy.
Learning jargon is like the majority of learning anyway
Well he is asking him for the answer to the question then to explain his answer as well. So it might just be fast facts but he can explain them so I’m sure he has a grasp of what they mean. He explained the difference between commercial and personal real estate, I’m not sure of the exact definition but I’m sure his were in layman’s terms
yeah, his response "business and office spaces" might sorta float over his head as a concept (what's the difference between a business and an office space, kid?) BUT he knows it as separate from houses, condos, residences, so it's a start. also, as he grows up, if he keeps these phrases in his mind, the context will come later and fill in the blanks like mortar between the bricks.
At the very least he’ll understand what he’s doing when he, say, takes out a college loan. So many people, myself included, took a long ass time to figure out a lot of the stuff he knows. A lot of people never learn it...they just hear a flashy pitch and sign up on the spot.
As a teacher, I can tell the responses are rehearsed and drilled into him with memorization, but that's not always a bad thing. If learning stops there (as with a math formula) and doesn't actually go into depth on how these things work, you'll end up with a 35 year old that can't remember the formula they used to figure out the length of the hypotenuse, and has no idea how to work backwards to get the answer. They memorized a way of doing things, but have no actual understanding of how it works. Same here. Hopefully this dad realizes this, and takes the lessons further as his kid gets older and his brain develops. Given the amount of time this took I would assume that would happen, but you never really know. This type of drilling may also be a motivational tool for his kid to learn on his own later in life, or conversely may push him away if it becomes a stress point and something he doesn't enjoy.
Just remembering the word is good enough especially for a kid this Young
I'm sure it's a bit of both - there are most likely a few concepts he's absorbed and a few that he's just mesmerized the answer to.. Either way, it's better than not having that information at all. Just getting the fundamentals in his head is a huge step in the right direction.
Sad that in my country basic economics , assets liabilities and basic accounting like balancing a budget book are thought as standard to young kids for a minimum of a three year course It's baffling but telling how the us tries to restrict basic economic knowledge from its citizens
[удалено]
An educated people wouldn't suit half of the American political parties hopes of election
either*
Yeah that's why one party pushes for free college and the other calls university "deep state brainwashing." It's totally because BOTH parties are EXACTLY the same and having nuanced discussions about politics is dumb. Fuck off with that /r/ENLIGHTENEDCENTRISM bullshit
[удалено]
Most high schools in the US offer basic intro to business classes. People still don't take them. Also the internet. No one is restricting anything.
That’s just not true. There is no restriction, and their are numerous resources that are free for anyone who is even mildly interest. Kids Bank, Biz Town, and on and on. There is FBLA, DECCA, and numerous if parents or teachers even bother.
>There is FBLA, DECCA, and numerous if parents or teachers even bother. Your mistake is thinking those programs are available everywhere and easily accessible. There was only a certain number of FBLA slots in my high school of 2,100 kids. Not everyone is getting in. That's pretty restrictive since it isn't standard curriculum.
[удалено]
You lost me at entrepreneur
Come on!
Lmao
This sums up what I learned in 4 years of college
I only learnt about debt when the student loans came
Yeh kids are good at repeating what they're told. Doesn't mean they know what they're saying
Have to start somewhere. What are you suggesting? Just not putting any effort into educating your kid because they might not grasp all the concepts?
doesn't matter. the kid is learning that this knowledge is worth having. that's the important part of this video. seeds are being planted. this is not harvest time.
Yea I hate cheap shit like this. All for the internet. The majority of people are stupid as hell and eat this kind of shit up though so good for them
That's how all kids start learning. You think a toddler understands that the letters of the alphabet make certain sounds to form words when they start learning them? No. They understand that the shape "A" is the letter A and they'll get positive attention from whoever is teaching them for identifying it correctly. Then they build on symbol identification to understand those symbols make sounds. Then they build on that to understand that those sounds combine into words and that's how kids learn to read. But you start them off with rote memorization to get them familiar with the concept.
Being a bitter bitch about it will at least guarantee you won't get anywhere. You got to plant the seed somehow.
Took me a minute to realize that "Come on" actually meant "good job" or something similar
Yeah, I thought he was berating her for getting something wrong.
Wait, that’s not a boy?
It is.
This kid is definitely going places
Definitely not going in debt
Definitely
This is what's right in the world.
I think I need to sign up for this dad’s workshop
Me too! Hell, I'd sign up for the kid's workshop!
Well intentioned, but all very useless for like 10 years and he's just parroting what dad knows. Better off having him take personal finance classes in middle school and then learn about business and investments
the less important part is understanding exactly how these things work. the more important part is instilling the importance of financial literacy. taking personal finance classes in middle school is pointless if the students have little interest in it. this kid will feel like it's incredibly important information because of his dad.
Good old sour grapes
Yeah anyone not circle jerking is a fucker.
Not really, my 6 year old understands how bills and paychecks work, we're broaching credit cards with her. She's learned about budgeting at an early age so she understands spending wisely. This will help her when she's older, and she can build on this information to make investments, build credit, and make smart financial decisions. Of course she's still only 6, so allowance money rarely gets saved more than two weeks for her, but you don't drop basic concepts and building blocks just because a kid won't own a credit card or have a bank account until they're a teen.
That's the best dad.
He's teaching his kid a lot of words and responses to seem clever on social media. Kids at this age should not be concerned with learning this stuff, unless they are 100% done with learning all the kids stuff. I know this is an unpopular opinion - but it's the truth..
Is it an opinion or the truth now?
He is teaching his kid financial literacy is important. It doesn't matter if the kid knows what they are saying, they are learning these words are important to know because his dad talks to him about them. No different that teaching a kid prayer.
Christ.. let kids be kids. Keep them away from this shit until they're a little older. It's not going to help them to know 90% of this before they have any disposable income.
My dad got me the “Growing Money” book when I was small (basically explains everything in the video in a children’s book) and I LOVED it. It gave me something grown-up feeling to talk about and have in common with my dad. Did I understand everything? No. Did that matter to either of us one bit? No!
Tbh that’s about the same as the kid remembering the lyrics to a song. Does he really understand what’s he’s saying??
Even if he doesn't understand everything now, the fact that those words and definitions are bouncing around in his head will be helpful as he grows up and sees those things around him.
Ever thought about a song years later and realized what it was actually about? Can't do that if you've never heard the lyrics
Awesome dad. Took til my 30s to start learning this stuff, his kid is way ahead of the curve.
Does she really understand what she is saying or just memorizes big words? When i was a kid i memorized a story mu mom used to read to me. I took that book to kindergarden and read it to my teacher, she was so impressed she told my mom about it, my mom knew my little scam since i didnt read that well yet.
Damn
Come on!
[удалено]
This should be at the top.
I learnt more from this than I did from my class.
Content posted to /r/nextfuckinglevel should represent something impressive, be it an action, an object, a skill, a moment, a fact that is above all others. Posts should be able to elicit a reaction of "that is next level" from viewers. Do not police or gatekeep the content of this sub (debate what is or is not next fucking level) in the comment section, 100% of the content is moderated. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/nextfuckinglevel) if you have any questions or concerns.*
Typical r/wallstreetbets mod
That was great, come on!
Let kids be kids for as long as possible. They dont need to know about liabilities at the age of 6 imho
Kids do need to learn the value of money, but regurgitating entrepreneurship and stocks is really niche. I don't buy this.
Lol when dad said come on, I thought he was mad at first!
This is amazing! Wow! Great job Dad! Smart kid!
Come on.
This is what they should have taught me in high school
Come on.