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Originally Posted by fixed_truth
Shame on me, but that was a genuine question. I've never purchased shares before and I've never heard of people buying them without expecting a return. But yeah I've probably looked over something simple.
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If you buy an asset and it increases in value you don't need to liquidate it to obtain benefit from it. A share portfolio (or a house) worth lots of money is an asset. Thus you can borrow against it and use the money you borrowed to buy stuff. Like more shares or houses. If those shares or houses increase in value to the point where they're worth considerably more than the debt you took on to purchase them, you can borrow against them. To buy more assets. Like more shares or houses. Lather rinse repeat.
You don't ever need to
sell the assets to get a return. They just need to keep going up in value.
Welcome to the bubble.
Of course this fun game of musical chairs is massively weighted towards those people who already have assets (shares or houses) before the music starts. So if you're a baby boomer who bought his first house in the Tauranga burbs for $10,000 in 1970, you're fucking
laughing. If you're a 25-year-old Uni graduate in Auckland with a $100,000 student debt then there's no way you're getting in the game. Forget it. And it's all the fucking Asians' fault.