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TranscendentalEmpire@lemmy.today 1 day agoThere is such a thing as a gold loan, but it’s not really a good deal compared to even something like a HELOC loan. The interest rates are much higher, and they’ll usually only loan out 50% of the value of the gold, and you’ll have to hand it over to the bank for storage.
The main problem with this is that you don’t have an income or a way to make more gold like billionaires can with stock. So you would have to eventually sell some of the gold to pay the loan. Which would entail not only paying interest on the loan, but a 28% tax on the gold. You don’t have a skeem like capital gains to lower your tax burden with a physical commodity.
TigerAce@lemmy.dbzer0.com 22 hours ago
Take out the loan. Invest it into stock. Get another loan to pay off the previous loan and living money. Continue indefinitely. Problem solved. Make more money, without touching the gold. Invest everything extra you make into more stock.
TranscendentalEmpire@lemmy.today 21 hours ago
Right, but for the loan amount you are going to lose 50% more than you borrow in gold. So if you want a million dollar loan, you’ll have to give the bank 2 million in gold to hold as collateral. You’re also going to be paying 10-30% apy on your short term loan.
If you start with let’s say 80 million in gold, you will only have enough collateral to secure 40 million in loans in total. Which at a 10% apy would occur 4 million in interest a year without accounting for any compounding interest.
If you did this perfectly and did not spend any of the money you borrowed for anything other than paying loans, you would only be able to do this for 10 years…not indefinitely. And that is giving you the lowest interest rate available.
Even if you invested in stock that you made money on, that earnings would be taxed at 20-30% depending on how long you had it for. So you are paying 10- 30 percent in interest to invest in a profit that gets taxed an addition 20-30%… It would be better to just have the cash.
TigerAce@lemmy.dbzer0.com 19 hours ago
Ok fine, keep the gold. Too complicated for me.