Navigating the Financial World: Gaining Insights and Understanding from a Practical Citizen’s Perspective

mathematician

You can do anything that is permitted and in which a bank participates or plays a part.

Sounds – to me – a bit like “speculating on credit”…? But you should also be aware of this and take into account the typical imponderables and risks…

I’m not a “mathematician” but just a practical and attentive citizen interested in finance – but on the one hand, leverage effects (credit leverage on equity) work in both directions (i.e. up and down) and on the other hand, evaluations of… Real estate changes quickly and significantly.

On the other hand, a lot is possible over such a (in this context rather short to manageable) period of “only” 10 years with an index like the MSCI World. Again, both up and down.

Do both cases occur together: additional demands for collateral or obligation to make additional contributions…?

Small but concrete example from practice on the topic of “real estate valuations:

The mix of a significant interest rate increase (tripling to quadrupling within approx. 20 months) in conjunction with legislative requirements (“Heating Act”) have here in the area (and there in a villa area with old buildings) i. The conversion and conversion of a former listed, very large office building located there into a refugee home has led to “new valuations” of the surrounding properties on the market, which the owners of the property could hardly have imagined within a period of just over 24 months should. Especially not in the residential area. From my point of view, it’s probably only a matter of time (if banks have financing in place) before it will be re-evaluated or re-evaluated and/or collateral will be requested (included in most loan agreements, as far as I know). At least in cases where the financing involves normal loan-to-value ratios without a huge safety margin.

Just discovered

It is also not common here to pay off the mortgage in full.

This probably has tax reasons in Switzerland (wealth tax, imputed rental value)…?!

In general: Subjectively (micro view) understandable – whether that makes objective (macro view) sense would be a different question (financial stability in the country as a whole; keyword: debt).

Speaking of Switzerland: Very beautiful and financially well-positioned country, excellent location, solid currency (as far as paper money can be – in my opinion the Swiss franc is the least bad fiat money), probably good pay, etc. See also here

My financial situation is quite good.

May I indiscreetly ask, why this haste and haste and risk when it comes to private finance?

2024-01-13 14:55:27
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