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What impact will interest rate increases have on premium financing? Is it not suitable to buy the Yi family model? Use examples to learn more about it
Many people recently PM me, asking whether it is not suitable for premium financing since the interest rate hike cycle is going on. Will you lose money by doing premium financing? If you don’t know what premium financing is, you can watch my previous video to learn more. There is a lot of money today, but your expectations for the stock market or property market are not so optimistic, and you even want to buy some.Low risk investment tools, in fact, even during the interest rate hike cycle, premium financing is still a very good choice! What’s the solution? Just wait for me to explain this piece, remember to watch to the end, I hope it can help you!
Okay, let’s get to the point. Premium financing is actually a game of interest difference. According to mathematics, your return is actually a combination of principal, time and interest return. The longer the time, assuming the interest return remains unchanged, your return will increase with the Time growth; Premium financing is based on this basis. Assuming that the time interest return remains unchanged, the principal is expanded to increase the total return.
Of course, the way to expand the principal is to mortgage the savings policy to the bank. The bank believes in the stability of the savings policy and borrows money to double the principal. Of course, borrowing money has costs, depending on the interest rate increase cycle.Borrowing cost goes to 4-5%, will it cause people who do premium financing to lose money? First do the return on premium financingThere are about 11%, so the interest rate hike cycle will only causeLess return,TieWon't go to the point of losing moneygenerous. Unless the interest rate is raised to exceed its own return, it is well known that the pace of Hong Kong's interest rate hikes may not follow the pace of the United States. What's more, if the interest rates are really raised to exceed 10%, I believe that those who are tight on housing should be more nervous. People with premium financing are even more worried.
Let’s take a look at this real example on December 26, 2022. Mr. Li just sold the floor solution and had 3 million in cash. He wanted to make arelatively low riskinvestment plan, let’s take a look at how premium financing can help them
If you do premium financing, start from the beginning of the plan.The monthly interest on cash collection is $12,500, we can have a conservative estimate in five years$170,000 capital growth; It’s been ten years, except that I have already collected$ 1.5 million cash interestIn addition, Zhong can earn$1.81 million capital growth; In 2015, except for the$2.25 million cash interest , Zhong can earn$ 3 million capital growth. This case is already a return under the interest rate hike cycle.
So do interest rate increases really have a big impact on premium financing? Is it possible to invest in the property market or stock market with low risk and similar effects? It’s up to everyone to decide for themselves! If you have any questions, please feel free to contact us at any time or click the noodle link to learn more!
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It’s up to you whether to borrow or not, it’s better to borrow first when you get something back! These are my personal opinions and not investment advice. Investment involves risks! Everyone should think independently!
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