Going into debt scares many French people, even though it is often the only way to buy an asset before having the money to pay for it in cash. ” THE very low borrowing rate from 2008 to 2022coupled with the rise in asset prices from 2008 to 2026, have enriched many investors”summarizes Maxime Roussigné, financial investment advisor and moderator of the Reddit r/vos finances. Thus, in finance, there are two types of credit: assets and liabilities. Liabilities are consumer credits, which allow you to acquire goods that will not increase in value (new car, television, etc.).
Assets, on the contrary, are ” good “ creditsthose who will indirectly bring in money. “ To get rich with leverage, the net return on assets must be greater than the cost of credit »summarizes our wealth management advisor. Real estate remains the land most used to apply this rule, because it is one of the rare assets that a bank agrees to finance almost in full. “Long-term loans, such as real estate loans or Lombard credit in fine (a loan guaranteed by a portfolio of securities, editor’s note) (…) are much more likely to constitute relevant sources of financing”he explains.
Debt and real estate, the winning combo?
When we talk about credit, the first possibility that comes to mind is a real estate loan to finance your main residence. Be careful, this is a debate that animates wealth advisors and financiers: some consider that the main residence is an asset, others a liability. Whatever the case, the goal here is to build assets, and the fact is that once the credit has been repaid, owning your main residence allows you to drastically reduce your housing budgetespecially in retirement, when income falls.
But be careful: buying your main residence rather than renting it becomes profitable from a certain number of years of detentiontime to amortize the costs linked to the purchase. In old properties, notary fees represent between 7% and 8% of the price of the property, compared to only 2% to 3% in new properties. Added to this are numerous costs, whether for loan guarantee, file, agency or broker if there was one, and especially the cost of interest paid at the start of the loan (which are higher than the capital repaid in the first years). Thus, according to brokers, the break-even point is generally between 5 and 8 years of detention, but varies greatly depending on the city.
Rental real estate, the leverage effect par excellence
Rental investment follows the same logic, but with the difference that it is someone else who finances the credit. When the rent collected covers the monthly credit payment, co-ownership charges, property tax and property income tax, while leaving a safety margin in the event of rental vacancy or unforeseen work, the operation is self-financing. It is this margin, often called positive cash flowwhich distinguishes a solid rental investment from a fragile project which requires the owner to draw on his savings regularly.
Once the credit has been paid, the rental property thus becomes a regular income supplement. This calculation depends directly on the credit rate obtained and the rental yield of the property, which varies greatly depending on the city: a studio in a student city will generally bring in more, in proportion to the purchase price, than a large apartment or a house in the suburbs.
However, we must maintain a principle of caution: “We must avoid getting into debt when the cost of credit deviates too much from the risk-free rate”warns Maxime Roussigné, who evokes a risk-free rate close to 2.25% in July 2026. This theoretical rate, close to that of the safest government bonds, does not reflect the real cost of a classic real estate loan, which today is around 3.3% to 3.6% depending on the duration. The difference between the two gives an idea of the cost that real estate leverage represents compared to an investment deemed risk-free.
A principle that also applies to the stock market, with caution
The same reasoning can be applied to the stock market. In particular, we have leveraged ETFs, which multiply the movements of an index upwards and downwards (often double), which our expert describes as a “low cost credit”. But these remain tools to be used with caution, because in the event of a decline in the markets, the loss is also doubled.
The expert also mentions the box spread, an options strategy which makes it possible to artificially create a loan at a rate close to the market, by combining the simultaneous purchase and sale of several options on the same asset. A technique reserved for experienced investors due to its complexity.
