How to Manage Debt and Risk with a Solid Base of Income Producing Assets

Using cash reserves from a solid asset base to manage risk

Photo by Austin Distel on Unsplash

If you listen to mainstream media, you will agree that debt is a big topic, particularly household consumer debt. And in many cases, you will find experts hammering on not just consumer debt, but also on all types of debt.

While I totally agree that incurring unnecessarily high consumer debt is a bad idea, I don’t agree that all debt is bad. In an article I wrote recently titled, “Debt Is Not the Problem, You Are!”, I discuss this issue in some details so you can check it out.

Using debt or financial leverage will allow you to build financial freedom faster. It will allow you to shrink time. The key is wise leverage. If used correctly, it has the potential to increase your wealth and improve your life. If used unwisely, it will burn you.

To leverage the use of debt appropriately, you have to manage the risk that debt introduces and one way to do this is to manage the risk with a financial reserve from a solid base of income-producing assets.

Let me explain.

There are 3 steps involved here:

Step 1: Build a Solid Base of Cash Generating Assets with…