Buy, Borrow, (Never) Die
Compare funding your lifestyle by extracting taxed dividends from a holding company versus borrowing against its shares and never realizing a gain.
How big does the fortune need to be?
To borrow 700 000 kr/year forever without ever breaching a 50.0 % loan-to-value limit, the holding company needs to be worth at least 7 232 031 kr today. The loan-to-value ratio peaks around year 15, then falls forever after — the strategy gets safer with time.
Dividend-funded (Scenario A)
- Final net worth
- 1 714 706 234 kr
- Cumulative tax paid
- 17 045 045 kr
- Effective rate vs. wealth growth
- 0.8 %
Debt-funded (Scenario B)
- Final net worth
- 2 178 402 936 kr
- Cumulative tax paid
- 0 kr
- Effective rate vs. wealth growth
- 0.0 %