House is an asset. It has to be considered. That’s why I said networth can’t be negative.
Just to give you more clarity, if you are saying house is not an asset when it is still mortgaged, then does it belong to the bank? Somebody has to be the owner right. You have full right to use it for your benefits and hence it’s your asset.
You can even receive rent from it and claim depreciation. (Subject to provisions)
So again, only if you have taken unsecured personal loan, then your networth can go negative. Not otherwise.
Location, Location, Location!
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If it’s 1cr business, I would want a minimum of 20 percent. But if it’s a business involving 10 crores then may be I would even be okay with 16percent.
So there is no clear answer. It also depends on the risk parameters of the business.
This again depends on the type of business. Higher the leverage higher is the risk as you also know. I am very risk averse person. So I may keep debt:equity ratio around 3:7
But many business keep it much higher. May be around 8:2 also. So it all comes down to the risk appetite. So clearly I can’t give you one answer because it changes from person to person.
Like for that matter, you are someone who likes 0 debt. I like 20 percent. Am sure there are many over here who take 5 times leverage. That’s basically 80 percent debt and 20 percent equity.
Not sure if I answered your question or created more questions in your mind. 
No, no I understand. It’s just when mentioned bussiness, I just wanted a through answer to those questions. Like that reminded of below question from long ago.
Well leaving the question above, the background was that, as mentioned by OP, the guy was in real estate bussiness and had leverage like basically put entire of his holdings and savings in bussiness and lost all when he wasn’t able to service the debt. And he is not the only guy, I come across many many people that pledge almost everything and find themselves in trouble when bussiness goes and they are not able to service the debt. I was wondering like surely there must be something deeply wrong . Pretty sure there must margin, target miss for such crisis to happen. I just didn’t know what’s the margin(debt to equity ratio,) target % of a good sustaining bussiness.
I can even go further say, it’s same in trading f&o right. It is a bussiness, and often times we see people full crazy using whatever savings they have to play in f&o , especially buying options is leverage and everyone goes crazy and loses everything. I see f&o as bussiness too. Only difference is , I guess we can exit when we want and there is interest rate component here(servicing the debt I mean).
I just want to know the metrics and do it in right direction way.
LOL, @raoawesome Ultimately , it boils down to two things : 1. All these calculations , projections are highly dynamic in nature and subjective to person. There is no right or wrong answer. If you feel you should track or manage certain way then all good, you should be comfortable with what your doing 2. There is always a counter party to what you do in financial world both exists as there are enough checks and balances .Basically its win win game for both.
Thats your Business/Investment mindset kicks in , Its true but on EMI , think it like SIP( That too in true terms EMI-Expense you have to pay if on rent) than it might be not sizable. But again , I really don’t like to buy because it gives me flexibility to move to new location with opportunity even location within the city. But , i agree it may change in future .Buying a house its big decision and many personal factors kicks in. But , surely if i know i gonna stay in a place for at least 10-15 years then house makes sense and with this time frame you will see at least 1-2 housing cycle.
It is business. When you take two times leverage, it means you are going for debt equity mix of 1:1.
Buying OTM option is very risky. With 10k you can buy nifty worth rupees 10lakhs. (already assumed nifty to be 20k.)
So indirectly 9.9lakhs is borrowed money. That’s why we have time value of an option. It can even double your money to 20k. That’s 100 percent return per day.
But if an option buyer is going for ITM option and paying around 50k then 9.5lakhs is coming from debt indirectly. Risk reduces and so does return.
An option seller at the same time, gives margin of around 1lakh. Risk reduces further.
On paper option selling looks more risky, but if you ask me option buying is. Again I am not seeing trade wise. I am seeing over a period of time.
The max leverage I have taken in option is 1.2times. That’s what I am comfortable with for the risk appetite that I have. To conclude, in my opinion little leverage is good.
One thing about desire and materialism is I found out is that 
… It’s a bottomless pit. Like I didn’t have a bike, bought a bike, I didn’t have a car, bought a second hand one. Travelled lot in both then I went a little crazy and thought I should buy myself a mini plane for travel or a glider. Well I am not that rich but something came to my head “wait a minute I only aspired a bike, how did it come to a plane ” and said to myself like , I this much is enough 
, also had some crazy experiences too. I am a all or nothing person.
Ohh I did this stuff too. Well I was earning much and no debt, so I had lot of chocolates especially I love hide and seek biscuits, used to eat packet everyday. After a month , cavities and got root canal done with dentist . Terrible experience.
Same way , I ate outside resturant for a 2 months. I was not eating healthy at all. Became bloated, fell sick, stomach problems. Went to doctor again for medicine
It was same for travel. For one I had a job and weekends are free. So it’s just wearing gears and riding long. Only difference is I started to do this every weekend. Fatigue caught up(travelling is work, commute certainly takes toll, riding bike or driving car or catching multiple train, bus or flight it’s all same) and I horribly became sick and went back to doctor.
So I said to myself , well I am just gonna focus on building my basic infrastructure (which is mostly done) , take care of my health and as far others well (travel, adventure etc) , if it’s there let me do it in a way that doesn’t harm me or doesn’t matter if it’s not there too😅.
Well the goal for me is having stability and growing in right direction.
This is my perspective. Okay look, it looks great from outside but not worth buying it. Well you have buy it, assume you are rich but then you have to take care of it, arrange servants to keep it clean , arrange for maintenance. I guess all this can be outsourced. But look at the cost and reward, so you do all this only to spend few days in that sea facing villa. Sounds absolutely ridiculous. It’s better to go to a resort to get same experience for few days. Unless you have some bussiness or you are a instagram influencer or someone that wants social currency like status, it absolutely makes no sense to buy villa near beach .
It aleast gives a direction , am I correct? . Being lost in right area is far better than being lost in unknown area.
Today in the gym, i saw a guy half of my body weight lift more weight than i do.
Then i just paused and thought, isnt trading and financial planning also same way?
what works for one will definitely not work for other. Choose your own path.
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Yes true. So one should draw a line on the want for material things which has only utility value. When that will happen is a personal question and vary from person to person.
