Use Money To Grow More Money (using bonds)
Below is a leverage bond portfolio that can be done in a private bank.
Capital outlay for this portfolio is USD558,480. Using this fund, the bond portfolio can generate USD51,146 per year. This gives a leverage yield of 8.65%.
Bonds are generally low volatility investment if held for longer term. The cashflow from bonds are predictable (assuming no default or debt restructuring). Investors know when they will receive the next coupon and they know what amount to receive.
Stocks virtually never have this same level of predictable cash flows, because so much depends on earnings growth and dividend payouts. These can rise and fall by large amounts for a sustained period.
Some high net worth investors use the bond portfolio to pay for their daily expense (if they had retired), some use it to pay for their children's education, some use it to pay for their mortgages.
End of the day they are using money to grow money.
In some cases, the high net worth investor does not need to come out a single cent from his own savings to pay for his children overseas university education, because his bonds are paying for them.
More information on leverage bond investment can be found here: myasiaprivatebank.blogspot.sg/2016/10/how-does-rich-invest-in-financial.html?m=1
Capital outlay for this portfolio is USD558,480. Using this fund, the bond portfolio can generate USD51,146 per year. This gives a leverage yield of 8.65%.
Bonds are generally low volatility investment if held for longer term. The cashflow from bonds are predictable (assuming no default or debt restructuring). Investors know when they will receive the next coupon and they know what amount to receive.
Stocks virtually never have this same level of predictable cash flows, because so much depends on earnings growth and dividend payouts. These can rise and fall by large amounts for a sustained period.
Some high net worth investors use the bond portfolio to pay for their daily expense (if they had retired), some use it to pay for their children's education, some use it to pay for their mortgages.
End of the day they are using money to grow money.
In some cases, the high net worth investor does not need to come out a single cent from his own savings to pay for his children overseas university education, because his bonds are paying for them.
More information on leverage bond investment can be found here: myasiaprivatebank.blogspot.sg/2016/10/how-does-rich-invest-in-financial.html?m=1
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