By in Random

Rich but no money

It is ironical that many rich people have no money.

When a person has the means to buy a house worth S20 millions, you will classify him as a rich person.

The bank thinks this person is a rich person too. After all, it has to lend about $16 millions to finance the purchase of this house.

Why is this person rich but has no money?

When the housing market and stock market crash, and he needs to sell the house to release the capital, he cannot find a buyer.

As it is, he has no money to service the loan, and the bank seizes it and auctions off the house in order to get the money back.

The auction price may be enough for the bank to recover the mortgage, and probably not a single cent will go to the original owner.


Image Credit » https://pixabay.com/en/woburn-building-house-historic-835913/ by WikimediaImages

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Comments

valmnz wrote on August 22, 2015, 12:34 AM

I think you need to be a risk taker with plenty of assets for that to happen. I'm happy to be rich in quality of life, not in material goods.

CoralLevang wrote on August 22, 2015, 11:11 AM

I am rich, and I have no money, nor do I have a mortgage.
In fact, when I die, nearly penniless, I will be richer than I have ever been.

AliCanary wrote on August 24, 2015, 4:04 PM

People who are actually rich don't need to borrow money to buy things...

cheri wrote on August 26, 2015, 10:02 PM

This is really frustrating to know

trufflehunter wrote on August 29, 2015, 2:56 PM

So sad. Guess it doesn't pay to have all your wealth in assets.

Rufuszen wrote on September 16, 2015, 9:15 AM

It is rather fascinating that rich people seem to have little, physical, money to hand.

crowntower wrote on November 1, 2015, 4:31 AM

I think you have to be wiser in investing. I know someone who invest a lot, that if one fails she can definitely has a lot of investment to recover what has been lost. I think sometimes we have to be a risk taker even if we lost everything... than to lose everything without a fight. But taking risk just because of caprice ... it will take us all out without a penny inside our pocket.

grandma20121 wrote on December 19, 2015, 11:49 PM

ueah its kind of strange how they assume your rich if you take out the loan if you were rich you wouldnt need the loan in the first place