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Your assets tend to become more valuable over time, which allows you to borrow more money to pay the interest and give yourself spending money.

Eg, suppose you have $10M in assets and borrow $200k against it. Next year it's worth something like $10.7M on average, you get charged something like $8k in interest, and you borrow another $200k to spend. So long as you leave enough of a buffer against volatility and the rate of growth of your assets is high enough, you can just borrow money indefinitely against appreciating assets.

People did this in the run-up to the 2008 housing crisis with homes, too. Take out a loan, cash-out refinance later when it's worth more, end up with a house you've taken more cash out of than put in.



ah, now I understand. sort of like the "safe withdrawal rate" for normal people.

also sorry, didn't realize both of my questions went to the same person.




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