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Super Contributor
In my view that is why banks are excellent long term investments... they just need to have a good risk management system in place...
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Super Contributor
CSP and Hennie - "Save" in your flexibond to cut interest, sure you don't earn interest but the savings compounded are astonishing. It is mathematically proven that any "savings" on interest cost accrues an effective 23% return - this is because of the "after tax" and mechanics of compound interest. Then: no advance payment on a flexibond will be frozen - Hennie: do your home work and you will change the negative perspective radiated by your uninformed comment.
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Super Contributor
Credit gives leverage to help improve ROI, but also brings risk. The investment banks are playing a dangerous game - they could make big profits out of their gyrations during the crisis, or they could go under. Buffett keeps lots of cash around to reduce that risk, which means he sleeps better and can take advantage of times like this. Berkshire will very likely still be there, and will be making pretty good money regardless. So - I think a positive balance is better, but you can't just leave it in the bank. If you use it well (and add debt where you're more sure of the outcome), you should do better over a wider range of situations than those who primarily rely on borrowing.
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Super Contributor
Sorry: CSP should be CPS
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Not applicable
I do not have a bond and still do not agree with you, 23 % return wow and they charge you 300 % of you capital lent make the math Dear !
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Not applicable
Yeah i agree to a certain extent, but surely if i could not afford a R300k car cash the car would not be R300K. Part of the supply and demand curve? And the manufacturer would refuse to build it for more than he can sell it? The world would be a bit slow, as everyone would need to save before consuming big ticket items. But growth would be real growth not this credit driven illusive growth. Where people owe money for the most part of their lives, and even die in debt.
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Super Contributor
Thats true, but the world seems to rather work on credit, which i dont like to do, and as the world will not change all we can do is try to profit from that, and the easiest is long term investment in the people that provide the funding and earn handsomely off it - the banks.
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