Borrowing to Get Rich? The 3 Levels of the Rich’s “Aggressive Leverage”

Have you noticed a strange phenomenon? Ask any bank branch and the people with the most deposits are also the ones with the most loans. Meanwhile, ask any young person drowning in credit card debt what they want most, and the answer is to pay everything off at once.

Same debt, opposite uses. One treats it as fuel, the other as a chain. The real gap between people was never how much you earn — it’s how you see borrowing. Today I’m going to flip your view of debt upside down — not teaching you how to pay it off, but how to take it on strategically.

1. The Nature of Money: Its Attribute Is Decided by You

Let’s start with a basic question most people never really figure out: what is money?

A textbook will tell you money is a medium of exchange, a unit of account. But ask someone who truly understands asset allocation and they’ll say: money is a form of energy. This energy has no inherent attribute. Owning it won’t automatically make you rich, and owing it won’t automatically make you poor. The attribute of money depends entirely on what you use it for.

Why do most people fear debt? Because from childhood they were taught that owing money is wrong, that it signals incompetence or poor self-management. This lesson isn’t entirely wrong, but it ignores the most critical variable: the interest rate.

There are two fundamentally different kinds of debt in this world:

• The first is high-cost debt: credit card revolving interest, auto loans, those “zero-interest” installment plans with outrageously high processing fees
• The second is low-cost debt: certain policy-driven startup loans, low-interest loans secured by quality collateral, and — in some special periods — debt whose real rate is close to zero or even negative after subtracting inflation

The fundamental difference between a smart person and an ordinary one: ordinary people get scared at the word “debt.” Smart people get excited when they see low-cost debt. Why? Because if you can borrow at 2% per year and use that money to create 6%, 8%, or even higher returns, the spread is other people’s money working for your assets.

This isn’t some sophisticated financial trick. It’s the most basic arbitrage mindset. But think about it: how many people have never once grasped even this simplest idea in their entire lives?

2. Why the Rich Aren’t Afraid of Risk: A Gap in Cognitive Dimension

Many people say I get the logic, I just don’t dare. The reasons come down to two: first, fear of loss; second, fear of being unable to repay.

Let’s start with the fear of loss. Have you ever wondered why truly wealthy people stay calmer than you in the face of risk? It’s not because they’re braver — it’s because they define risk completely differently from you.

For ordinary people, risk means I might lose money. For the rich, risk means I don’t have enough tools to hedge against uncertainty. The difference between these two is a crushing gap in cognitive dimension.

Take an example:

• An ordinary person who wants to invest thinks: I put NT$100,000 in, can I turn it into NT$110,000 in three months? If it might turn into NT$90,000, forget it, too scary.
• A person who truly understands asset allocation thinks: How is my overall asset structure? Is my cash flow healthy? What’s my cost of debt? Does my investment target have a long-term value-creation logic? Can I handle short-term volatility? Do I have a backup plan?

See the difference? Ordinary people look at single-point wins and losses. Pros look at the resilience of the whole system. That’s why the same market volatility makes one person lose sleep and another add to their position. It’s not because they have more money — it’s because their entire financial structure is different.

Structure determines how you see volatility. If your financial structure is a bamboo house, even a light breeze scares you. If your financial structure is steel-framed, when the typhoon comes you can stand by the window and enjoy the view.

3. The Real Rule of Leverage: Stable Cash Flow + Long-Term Value Logic

Many people have heard the word “leverage,” but most react to it with speculation, danger, playing with fire. That reaction isn’t wrong, because most people encounter leverage in the worst possible way at the worst possible time — borrowing to day-trade stocks, mortgaging a house to chase a stock that has already tripled.

But leverage itself is not the problem. The problem is the person using leverage without respecting its rules. The only real rule of leverage is this: the money you borrow must be invested into assets that produce stable cash flow, or that have a long-term value-creation logic.

Notice my wording — “stable cash flow” or “long-term value-creation logic.” You need at least one of these two. If you have neither, your leverage isn’t leverage — it’s your death warrant.

What Does “Capable of Producing Stable Cash Flow” Mean?

The most typical example is borrowing money to invest in an asset that brings you monthly rental income. The rental income covers your monthly payment and leaves a surplus. That surplus is your passive income. You didn’t do anything — you just performed one arbitrage. That’s the most basic model.

What Does “Long-Term Value-Creation Logic” Mean?

For example, borrowing to learn a skill that will add a fixed amount to your monthly income over the next three to five years. The borrowed money itself doesn’t produce cash flow, but it elevates your ability to earn. That counts as value creation.

Or you borrow to start a business. The business has its own risks, but the track you choose, the business model, the team, the execution capability, together form a long-term value-creation logic. If the logic holds, debt is fuel. If it doesn’t, debt is a black hole.

So why do most people still borrow even when the logic doesn’t hold? Because they’re held hostage by one thing: urgency — urgency to make money, urgency to turn their life around, urgency to prove themselves.

That sense of urgency is the trap. Look at the people who crashed because of debt. They didn’t start out owing tens of millions. They started with a small loan they were sure they could repay. The interest rate wasn’t high, and the amount wasn’t large, but the project they put it into had no stable cash flow and no long-term value-creation logic. They just thought everyone else is doing it, I can too, or this opportunity is too good to miss.

A truly good opportunity will never disappear just because you entered three months late. An opportunity truly worth borrowing for will withstand three, six, or even twelve months of verification. If you’re not willing to spend that verification time, it means you don’t really believe in the opportunity — you just let greed cloud your judgment.

4. The Strategic Debt Formula: Three Key Points

What kind of debt actually qualifies as “strategic debt”? Here’s a formula — screenshot it.

Strategic debt = borrowed money invested into an asset or capability with a stable annualized return safely above the cost of capital, and where the risk of that asset or capability sits within your tolerance.

There are three key points in this formula:

1. The Return Is Stably Above the Cost of Capital

Notice the word stably. Many people only see “above” and forget “stably.” Borrowing at 3% per year to invest in something that might rise 30% in a year or fall 30% in a year isn’t strategic debt — it’s gambling. Real strategic debt pursues certainty, not windfall profits.

2. The Risk Stays Within Your Tolerance

What does that mean? If the worst case happens and you lose, can you still repay? Will your cash flow break? Will your life collapse? If the worst case happens and you can still survive, the debt is worth considering. If the worst case leaves you beyond recovery, no matter how high the return, don’t touch it.

3. Will This Debt Affect Your Future Financing Ability?

This is the most easily overlooked point. In the real world of asset allocation, credit is your most valuable asset. Every on-time payment is a deposit into your credit account. Every default or delinquency is a withdrawal from it.

A strategic borrower doesn’t just borrow to capture a small spread — they also think about how this debt affects their credit record. Because the better your credit, the cheaper the money you can borrow in the future, and the larger the amounts you can access. That’s a positive feedback loop, and most people haven’t even stepped through the first door of that loop.

5. Why the Rich Dare to Borrow: Confidence in Future Cash Flow

Many people think the rich dare to borrow because they have money and can afford the loss. That’s only half right. The confidence of truly wealthy borrowers doesn’t come from the size of their existing assets — it comes from their confidence in their ability to generate cash flow.

Think carefully. What is the core asset of someone who truly understands asset allocation? It’s not stocks, real estate, or gold. It’s their ability to earn — their skills, their cognition, their network, their judgment. These intangible assets are their real trump card. As long as those trump cards are intact, they can always create cash flow and handle any debt at any time.

That’s why the people who truly dare to use leverage spend far more time and money on themselves than ordinary people. They may spend hundreds of thousands per year on courses, on mentors, on getting into higher circles. Ordinary people see that as spending. They see it as appreciation of their core asset. And the return on this core asset far exceeds anything on the market.

I have a fascinating friend who started from nothing and now runs several sizeable projects. He once told me a line I’ll never forget:

“There’s no secret to borrowing. There’s only one iron rule: you only ever borrow an amount that, even if you lost it all, you could still repay.”

I didn’t get it: “If you lose it all, how do you repay?”

He said: “Not with what’s left after the loss. With your monthly cash flow going forward.”

“Able to repay” doesn’t mean your current savings cover the debt. It means your future income ability is enough to cover the monthly payments. As long as you have confidence in your future income, you can take on more risk — because you know that even if the investment goes to zero, you’ll still have salary, project payments, or rental income next month and the month after. You won’t default. You won’t break. You won’t collapse.

That’s the real confidence. It doesn’t come from how much you have in savings. It comes from how much confidence you have in your future ability to create value.

That’s why the people who truly dare to use debt are, at their core, extreme optimists about the future. They believe their future will be better than their present, so they dare to borrow against the future to invest in themselves or the opportunities of today.

6. Financing Ability: As Important as Investing Ability

Many ordinary people don’t borrow not because they lack opportunity but because they can’t get access to low-cost money. This brings us to another critical ability: financing ability.

In asset allocation, financing ability is as important as investing ability — even more important. Because no matter how high your investment return, without principal, it’s all zero. And financing ability is essentially the ability to convert trust into money. Banks will lend to you cheaply not because you’re a good person, but because they assess your default probability as low. Why is it low? Because you have stable income, because you have assets to pledge, because you have a clean credit record.

None of this can be built in a day. So if you want the ability to use debt strategically in the future, you need to start now — managing your personal balance sheet like a CEO.

• Your income is your profit and loss statement
• Your savings, property, investments are your assets
• Your loans, credit card balances are your liabilities
• Your credit score is your passport in the financial system

Most people have never looked at themselves from this angle. They just take their paycheck, pay the bills, and spend the rest. No balance sheet, no cash flow planning, no credit management. They’re not running their life — they’re just passively living it.

7. Already Drowning in Debt? Three Practical Steps

I know a lot of you are thinking: I get all of this, but I’m already weighed down by debt. Monthly payments are choking me. What should I do?

This is a real question. If you’re currently in a state of mounting debt and negative cash flow, your first priority is not learning strategic debt — it’s surviving first. Here’s the most practical advice I can give you:

Step One: Stop Borrowing New Debt to Repay Old Debt Immediately

This is the fundamental reason most people sink deeper. Robbing Peter to pay Paul only digs the hole bigger.

Step Two: List All Your Debts and Sort Them by Interest Rate from Highest to Lowest

The highest-interest debt is your biggest enemy. Even if you can only pay an extra NT$1,000 per month, prioritize the highest-rate debt. Because the compound effect of high interest is the fastest path to financial collapse.

Step Three: Increase Your Cash Flow

Don’t tell me you can’t. In this era, as long as you’re willing to put aside your pride and put in the time, you can always find ways to earn more — deliveries, side gigs, freelancing, selling things you don’t use. There’s no shame in side hustles. The real shame is being in debt you can’t repay.

When your cash flow turns positive and your high-interest debt is cleared, your financial situation shifts from a negative loop to a positive loop. Only then do you have the standing to talk about strategic debt. The order cannot be reversed. A person who can’t even handle basic survival should not be playing leverage games. That’s not brave — it’s stupid.

8. The Three Levels of Debt: Where Do You Stand?

There are three levels of understanding debt in this world:

Level One: Fearing Debt

You see debt as the root of all evil, you scrimp and you scrimp, you pay off debt as fast as you can, and your biggest life goal is to owe nothing. These people live with peace of mind, but most will never actually get rich. Because if you refuse to use other people’s money, you can only trade your own time and body for money — and a person’s time and body have limits.

Level Two: Blindly Taking on Debt

You see others borrow and make money, so you borrow too, but you don’t know where to put the borrowed money, and you don’t know how to control the risk. These people catch a lucky wave sometimes, but long term, most will hand back everything they made in a single volatility event — and often owe more on top. This is the most dangerous level, because they’re investing with a gambler’s mindset, not a strategic asset allocator’s.

Level Three: Strategic Debt

These people treat debt as a tool, using it with the precision of an engineer tightening a bolt. They only deploy leverage when the cost of capital is low enough, the return is certain enough, and the risk is bearable. They don’t chase windfall profits. They chase stable arbitrage. They don’t fantasize about overnight revenge. They trust the power of compound interest and time.

The gap between these three levels is not money — it’s cognition. And cognition can be upgraded through learning. The fact that you’ve read this far means you already have the chance to escape Level One, cross Level Two, and enter Level Three.

Closing: Don’t Ask If You Have Money — Ask If You Can Allocate Resources

One last truth that might be uncomfortable: the rich get richer not because they’re smarter, not because they’re luckier, but because they understand the rules of the money game more deeply than you do.

They know that in this game:

• Cash is the raw material
• Debt is the fuel
• Assets are the engine
• Cash flow is the final product

Ordinary people, when they get cash, just want to save it. Saving feels safe. But what does saving get you? It gets your purchasing power slowly eaten by inflation. Rich people, when they get cash, think about how to turn it into assets. When they’re out of cash, they figure out how to use debt to create assets. Their mindset is the exact opposite of the ordinary person’s.

You will never earn money outside your cognition. You will never control debt beyond your understanding.

If you take away just one sentence from this article, let it be this: Don’t ask whether you have money — ask whether you have the ability to allocate resources. Money is the result. Ability is the cause.

Starting today, look at your own finances through the eyes of a business owner — treat every expense as an investment, treat every borrowing as a strategic choice, and treat next month’s income as the result of the decisions you make today. You’ll find that the way the world treats you will gradually change too.

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Disclaimer: This article shares personal-finance concepts for reference only. It does not constitute investment or borrowing advice. Borrowing carries financial risk. Please carefully assess your own repayment ability, and consult a qualified financial advisor where necessary.