Insunaa Advisory Pvt Ltd, 15-2/1, Kollupitiya (2026)

21/05/2025

Good News for the Exporters – We are Powering Your Global Trade!

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03/04/2025

Strengthening Sri Lanka–U.S. Trade Relations: The Way Forward
In 2023, Sri Lanka imported goods worth approximately USD 513.37 million from the United States. The top imports included:

Animal Fodder & Food Industry Residue – USD 108.14 million
Pharmaceuticals – USD 91.23 million
Machinery & Industrial Equipment – USD 77.83 million
Medical & Optical Instruments – USD 36.26 million
Electronics & Electrical Equipment – USD 33.70 million
Plastics – USD 18.54 million
Textile Materials (Wadding, Felt, Yarns, et.) – USD 15.36 million
Chemical Products – USD 13.11 million
Manmade Filaments – USD 12.12 million
Paper & Paperboard Products – USD 8.46 million

Should Sri Lanka Reduce Import Taxes on U.S. Goods?

Lowering import taxes on U.S. goods could encourage the U.S. to reduce tariffs on Sri Lankan exports. However, it’s not automatic and depends on several factors:

Trade Agreements – Sri Lanka and the U.S. do not have a Free Trade Agreement (FTA). Sri Lanka previously benefited from the Generalized System of Preferences (GSP), with USA but lost this privilege (We still have GSP+with EU)

Bilateral Negotiations – The U.S. typically negotiates trade concessions case by case. Even if Sri Lanka reduces duties on U.S. imports, reciprocal tariff reductions would require formal trade talks.

U.S. Trade Policies & Regulations – U.S. tariffs are based on WTO rules, domestic policies, and strategic economic interests. Any reduction would require government negotiations or Congressional approval.

Political & Economic Considerations – The U.S. often links tariff reductions to labor laws, environmental regulations, and other trade reforms.

The Way Forward for Sri Lanka

Unilateral tariff reductions could improve diplomatic relations but won’t guarantee lower U.S. tariffs on Sri Lankan exports.
Negotiating a formal trade deal—even a sector-specific agreement—could create a win-win situation for both countries.
Exploring alternative markets and improving local production efficiency could help Sri Lanka reduce dependence on high-tariff exports.
What do you think? Should Sri Lanka push for a trade agreement with the U.S.?

Drop your thoughts in the comments! 👇💬

07/03/2025

Green Economy and impact of geopolitics
Sustainable and green trade practices continue to gain momentum globally, driven by environmental concerns, regulatory frameworks, and technological advancements. Key trends and statistics include:
1. Expansion of the Green Technology Market
The global green technology and sustainability market, valued at approximately $19.07 billion in 2023, is projected to grow at a compound annual growth rate (CAGR) of 22.9% from 2024 to 2030. This growth is propelled by increasing environmental awareness and the adoption of eco-friendly practices across various industries.
2. Adoption of Circular Economy Models
The circular economy, emphasizing the repair, reuse, and recycling of resources, is becoming integral to sustainable business strategies. Projections indicate that the circular economy market will expand from $696 billion in 2024 to $2.88 trillion by 2031, reflecting a significant shift towards resource efficiency and waste reduction.
3. Renewable Energy Integration
Renewable energy sources are playing a pivotal role in sustainable trade:
Global Capacity Growth - Between 2022 and 2027, renewable energy capacity is expected to increase by approximately 2,400 GW, accounting for over 90% of global electricity capacity expansion during this period.
Industrial Initiatives - India aims to triple its fashion and textile industry's value to $350 billion by 2030 while aligning with sustainability goals. This includes developing industrial "mega-parks" powered by renewable energy sources.
5. Impact of Trade Policies on Sustainable Energy
Recent geopolitical developments are influencing sustainable trade:
Tariff Implications - The U.S. imposed new tariffs on imports from Mexico and Canada by 25% and doubled duties on Chinese goods to 20%, potentially affecting the energy sector and international trade dynamics.
Supply Chain Adjustments - These tariffs may prompt shifts in supply chains, encouraging domestic production and the adoption of new practices to mitigate trade uncertainties.

These trends underscore a global shift towards integrating sustainability into trade practices, with significant economic, environmental, and policy implications shaping the future of international commerce.

06/03/2025

Understanding Open Account Transactions in International Trade

In the world of global trade, businesses often face a crucial decision on how to structure their payment terms while balancing competitiveness and financial security. One common method is the open account transaction, where goods are shipped and delivered before payment is due, typically within 30, 60, or 90 days.
While this system is highly beneficial for importers, allowing them more financial flexibility, it poses a significant risk for exporters, who must wait for payment while ensuring their financial stability.
Why Open Account Terms Are Common in Global Trade
With increasing competition in international markets, foreign buyers often push for open account terms. Offering this payment method can:
✔ Boost competitiveness – Buyers prefer suppliers who offer flexible payment options.
✔ Strengthen trade relationships – It builds trust between buyers and sellers.
✔ Expand market reach – Exporters willing to offer open account terms may gain access to new customers.
However, despite these advantages, open account transactions come with substantial risks that exporters must carefully evaluate.
The Risks of Open Account Transactions
While open account terms can drive business growth, they also introduce key financial and operational risks, such as:
🚨 Risk of Non-Payment – The importer may delay or default on payment, leading to financial losses.
🚨 Cash Flow Disruptions – Exporters must wait months for payments while managing production and operational costs.
🚨 Political & Economic Uncertainty – Global events, currency fluctuations, and economic instability in the importer’s country may impact payments.
How Exporters Can Protect Themselves
To mitigate these risks, exporters should conduct a thorough assessment of their buyers and the trade environment. Key considerations include:
🔍 Financial Health of the Buyer – Assess the creditworthiness of the importer before agreeing to open account terms.
🌍 Country Risk Analysis – Understand the economic and political stability of the importing country.
📜 Clear Contract Terms – Ensure that agreements outline payment deadlines, penalties for late payments, and dispute resolution processes.
Supporting Exporters with Trade Finance Solutions
While open account transactions may seem risky, exporters can adopt various trade finance solutions to protect their business and maintain financial stability. Some of these solutions include:
✔ Export Working Capital Financing – Helps exporters fund production while waiting for payment.
✔ Export Credit Insurance – Protects against the risk of buyer insolvency, default, or political instability.
As global trade continues to evolve, businesses must stay informed and adapt to the challenges of international transactions. Open account terms may be essential in today’s competitive market, but exporters should take proactive steps to ensure they are protected.

23/12/2018

Federal Reserve Rates hike & Sri Lanka

We have to tighten the monitory policy and if we do not follow suit their will be in impact on remaining investments in government securities by foreigners and securing them is very vital to our economy given its current status. Most likely outcome is an increase in Central Bank’s policy interest rates.

27/04/2017

Venture Capital simply explained

How typical Sri Lankan entrepreneurs Fund Start Up’s

When people come up with the perfect idea for a business They are convinced that their idea is the best thing since sliced bread and there is a huge market for it and some start-ups actually turn up that way whilst some fall out . Only problem is that just having an idea isn’t enough and that idea and turn it in to a viable business. Unfortunately to start and grown a business you need capital. So if you are that person in Sri Lanka this is how events will turn-up.

• You could turn to your own personal savings but most people do not have enough money lying around to allocate to a start up a business.. An obvious option is a financial institution after all they are in the business of providing money. However, in return they ask for small percentage, or interest, on their capital. This interest allows the institutions themselves to remain profitable enterprises but will be reflected as an expense for your /newfound business

• To ensure that you can and will repay the capital they will also ask for some type of collateral. This collateral will come in form of some asset you currently own (for example your house), which can be sold if their capital and interest is not repaid. if you do not or cannot honor your agreement you risk losing ownership of the asset you put down as collateral On the plus side they do not require equity in your business.

Venture Capitalists (VC’s)

An option which is not plentiful in Sri Lanka . VC offers the required capital to start and grow your business but instead of requiring collateral they require a stake in the business. For example

let’s say Nilu and Indika decided to start a new business called New E Meal (NEM) . As equal partners they divided the shares in the company on a 50/50 basis. Venture Capital company seeing the potential in NEM offer Nilu and Indika the amount of money they need to grow NEM in exchange for 1/3 of the company. If Nilu and Indika agree they will not have to put down collateral or pay interest but there will now be three shareholders in the company (Nilu / Indika and the VC).

If the business fails then the VC loses the money it invested but has no recourse against Nilu and Indika The risk is essentially shared by all parties. If and only if NEM becomes a profitable business does the VC make money alongside Nilu and Indika Since the risk is shared VC’s tend to be‘ active investors’. They help businesses get started by offering advice, making introductions and helping with strategic decisions. There is a common misconception that VC’s hold on to their share of the business forever. In reality venture capitalists typically look to realize their investment between 3 -7 years after they buy into a business. During this period the VC aims to help the business grow and become profitable so that the business (and their share in it) becomes more valuable. If the company succeeds the VC will look to exit either by selling their share of the business either to the original partners or to an external third party for a higher price than what was initially invested.

Since the Venture Capital companies interests and those of Nilu and Indika are aligned it serves as a win -win situation for everyone involved. In essence when deciding whether or not to help you raise capital for your new business VC’s tend to look to the future (or potential) of a business and also take into account how invested the entrepreneurs themselves are in making it work. On the other hand debt based lenders tend to look to the past. If you don’t have a business track record and collateral a loan can be almost impossible to get.

Private Equity VC Venture capital
How are PE and VC different?
Technically, venture capital is just a subset of private equity.
What They Do
While both PE firms and VCs invest in companies and make money by exiting – selling their investments – they do it in different ways:
• Company Types: PE firms buy companies across all industries, whereas VCs are focused on technology, bio-tech, and clean-tech.
• % Acquired: PE firms almost always buy 100% of a company in , whereas VCs only acquire a minor stake– less than 50%.
• Size: PE firms make large investments – at least 100 million up into the billions for large companies. VC investments are much smaller – often below 150 million for early-stage companies.
• Structure: VC firms use only equity whereas PE firms use a combination of equity and debt.
• Stage: PE firms buy mature, public companies whereas VCs invest mostly in early-stage – sometimes pre-revenue – companies.
Risk & Return
• VCs expect that some of the companies they invest in will fail, but that at least few investment will generate huge returns and make the entire fund profitable.
• Venture capitalists invest small amounts of money in dozens of companies, so this model works for them.
• But it would never work in PE, where the number of investments is smaller and the investment size is much larger – if even 1 company “failed,” the fund would fail.
• So that’s why they invest in mature companies where the chance of failing in 3-5 years is close to 0%.
Return?
Expected return of 20% to 25% (Profit) and at least X 3-5 times the investment at the exit stage

Management Fees
VC salaries come from their funds management fees. A management fee is typically between 1.5% - 2.5% of the total amount of money committed to the fund. The fees are used to finance the operations of VC firms, including salaries for investing partners and their staff. The Management Fee declines when the Investment Period ends on an annual basis. There are various formulas for the declining fee but a typical one is to decline 10% annually with a floor of 1.5%.
How it works
A VC fund, as with every business, is an enterprise whose goal is to generate profits for its shareholders (investors) and its management (investment team). How? By investing capital and expertise in businesses whose value has the potential to increase significantly over a period of time.
Structure
VC funds are typically structured as Limited Partnerships (the “Fund”) with the investors being the Limited Partners (“LPs”) and with the VC forming a management entity to act as the General Partner (“GP”). The Limited Partnership is governed by the Limited Partnership Agreement (“LPA”) which defines all the terms between the LPs and GP.

The GP manages the fund and makes the investment decisions and the LPs have no direct control over any investment decisions of the fund. Generally funds are limited to 100 investors and they need to be Accredited Investors. Accredited Investors have to have a minimum annual income or net worth.
There are many terms to a fund and they are documented in the LPA. Some of the typical key terms are as follows and we can follow our own customized terms going forward
• Fund Term: 7 years with the potential to extend the fund another three years with majority LP approval. The extensions are approved on a year by year basis
• Investment Period: 5 years. This is the period when the GP can make its initial investments in companies. After the investment period is over, the GP can continue to invest in the existing portfolio companies but can’t invest in any new companies.
• Investment Restrictions Examples
o No more than 15% - 20% of the fund can be invested in a single company;
o No investments in specific (Ethical and socio concerns of the investers)
o No more than x% of the fund can be invested into public securities;
• Capital Call Notice: The GP must provide at least 10 business day notice for the LPs to fund a capital call.\
• Advisory Board: An Advisory Board will be put in to place consisting of LP investors. No member can be an affiliate of the GP. The Advisory Board will review valuations, review and approve potential conflicts of interests and provide general guidance on any issues the GP brings to the Board.
• Defaulting LPs: If an LP defaults on their commitment to fund capital at any time they lose 50% of the value of their investment.
________________________________________
A brief resume of Sri Lanka,s oldest and strongest VC- Lanka Ventures Ltd
Since its inception LVL had been investing in a large number of sectors. During the past 5 years it has narrowed its focus on investments in Energy and Healthcare sectors. In June 2006 LVL formed a fully owned subsidiary under the name LVL Energy Fund (Private) Limited (LEF) to channel its investments in the energy sector.
Lanka Ventures PLC (LVL) was incorporated in February 1992 as a venture capital company. The original shareholders of the Company included Asian Development Bank, John Keells Holdings, Forbes & Walker Limited and the DFCC Bank. The Company obtained a listing for its shares at the Colombo Stock Exchange in 1995.
Following the IPO in 1995 Hatton National Bank also became a major shareholder. As at 31 March 2009, DFCC Bank and Hatton National Bank were the major shareholders of the Company with shareholdings of 58% and 20% respectively. In January 2010, the two banks transferred their shareholdings to Acuity Partners (Private) Limited a joint venture company equally held by the two banks.
From inception LVL had been investing in a large number of sectors but in the recent past it had mainly focussed on investments in energy and healthcare sectors. In June 2006 LVL formed a fully owned subsidiary under the name LVL Energy Fund (Private) Limited (LEF) to channel its investments in the energy sector.
PORTFOLIO
Power and Energy sector
Nividu (Private) Limited (NPL)
NPL owns two mini-hydro power generation plants; one situated in Belihuloya in the Ratnapura district and the other in Assupiniella in Kegalle district. The two plants are of the size of 2.2 MW and 4.0 MW respectively. The annual generation capacity of the plants is 10 GWh and 18 GWh respectively. The Belihuloya plant had been in operation since May 2002 and the Assupiliella plant commenced operations in November 2005. NPL is a joint venture with LTL Holdings Limited. LVL’s total investment in the two projects is Rs. 33 million.
Unit Energy Lanka (Private) Limited (UEL)
UEL owns and operates a 6.0 MW mini-hydro power generation plant across Mahaweli river in Ginigathhena in the Nuwara Eliya district. The generation capacity of the plant is 19 GWh and the plant commenced operations in March 2008. UEL is a joint venture with VS Hydro (Private) Limited. LVL’s total investment in the project is Rs. 85 million.
Neluwa Cascade Hydro Power (Private) Limited (NCHP)
NCHP operates a 2.2 MW mini-hydro power generation plant across Gin Ganga in Neluwa in the Galle district. The plant had been in operation since January 2008 and is capable of generating 9 GWh of electricity per year. NCHP is a joint venture with Hayleys Industrial Solutions Limited. LVL’s total investment in the project is Rs. 99 million.
Healthcare Sector
Durdans Heart Surgical Centre (Private) Limited (DHSC)
DHSC is part of Durdans Hospital and is a specialized unit for providing surgical and other facilities like cath lab procedures in relation to heartcare. The company had been in operation since May 2000 and up to end March 2010 had carried out 5,631 heart operations and 14,426 cath lab procedures. LVL’s current investment in the company is Rs 14.62 million.
Durdans Medical & Surgical Hospital (Private) Limited (DMSH)
DMSH is an expansion project of the Durdans Hospital which aims at adding 150 beds to the Durdans Hospital increasing the total bed strength to 315. The new hospital project will comprise two towers of 12 floors each and a car park that can accommodate 70 vehicles. The project is nearing completion but had started operations stage-by-stage facilitating smooth build up of human resources and commissioning of modern equipment. The new hospital will be fully functional by October 2010. LVL had invested Rs. 125 million in the new project.

Other Sector
Tudawe Brothers Limited (TBL)
TBL is a leading engineering contractor in the country which had been in the business for over 65 years. It had been involved in major road and building constructions work and is renowned for achieving high quality standards. LVL’s current investment in the company is Rs. 20.0 million.
E-Services Lanka Limited (ESL)
ESL commenced operations in 2002 with a significant government shareholding to facilitate the electronic transmission of Customs Declarations. The project had not been able to achieve the level of market pe*******on envisaged at the outset and as a result is not operating profitably. The current market pe*******on is only 26%. LVL invested Rs. 25 million in ESL.
Royal Fernwood Porcelain Limited (RFPL)
RFPL commenced commercial operations in 1997 and is a leading exporter of ceramic and porcelain tableware. RFPL recorded an export turnover of Rs. 474 million during the year ended 31 March 2010 but had not been able to operate profitably for several years. LVL’s investment in RFPL is Rs. 30 million.

19/11/2016

Break-Even Analysis? Vs Cash flow simplified & what is significant
A break-even analysis is the sales level that is required for your business to operate without incurring a financial loss. It is important to determine this point, as the viability of your business is reliant on staying above this number.
A break-even analysis is used to determine the point at which your business can operate without incurring a loss.
A Sample Break-Even Analysis
Let’s take a look at Sena’s Candle Store, a retail hut that sells candles. Sena buys his Candles from the manufacturer for LKR 10 and sells them for LKR 20, making a gross profit of LKR 10 on each Candle.
Gross Profit Formula
Sales Price / Cost of Goods Sold = Gross Profit
LKR 20 / LKR 10 = LKR10 per Candle
Gross profit is the profit he makes after subtracting the costs of the item that he is selling, excluding general expenses of running the business. So, in Sena’s case, the direct cost is the LKR 10 he pays per candle to the manufacturer. The indirect costs or overhead costs would be the costs of running the store. So, his direct cost of buying the candles will fluctuate based on how many candles he sells, whereas his indirect costs will remain fixed.
Sena is the only employee and pays himself no salary. Sena figures he doesn’t need to advertise because his retail hut is located across the street in a busy town. Sena’s only expense is his rent of LKR 2,000 per month, which also includes the electricity to power the one light bulb in his hut. Sena only takes cash for sales.
Sena determines his break-even cost by starting with his fixed cost of LKR 2,000 per month. Then he divides that by the gross profit of LKR 10 that he makes on the sale of each candle. So, his break-even in terms of unit sales is LKR 2,000 divided by LKR 10, or 200 candles per month.
Break-Even Formula
Fixed Cost / Gross Profit per Unit = Break-Even in Units
LKR 2,000 / LKR 10 = 200 Units (Candles)
Since break-even is often thought of in terms of units of items sold, his sales break-even would be 200 candles. He could also think of his break-even in terms of total sales: 200 candles multiplied by LKR 20, which would be LKR 4,000.
Break-Even Formula in Sales
(Fixed Cost / Gross Profit per Unit) x Sales Price per Unit =
Break Even Sales
(LKR 2,000 / LKR 10) x (LKR 20) = LKR 4,000
If Senas’s sales are fewer than 200 Candles (or LKR 4,000) per month, he is losing money—he would lose LKR 10 for every Candle sold. But, if his sales are greater than LKR 4,000 per month, he is making a profit—LKR 10 for every 200+ candle that he sells each month.
Reality Check for Your Business
A break-even analysis helps you determine whether your overhead is realistic or needs to be reduced. Maybe for Sena’s candle Store it is impossible to sell more than 190 candles in a month. If that is the case, then the fixed cost of LKR 2,000 per month is too high for his business model and Sena needs to make some changes—negotiate a lower rent, add an additional product line, or move to a new place.
What does cash flow have to do with a break-even analysis?
Note that this break-even analysis has nothing to do with cash flow. Let’s say Sena buys 300 candles every single month, generating LKR 6,000 in sales (300 x LKR 20), LKR 3,000 in gross profit (300 x LKR 10), and LKR 1,000 in pretax profit (LKR 3,000 – LKR 2,000 fixed costs). However, one month the manufacturer offers Sena a deal: if he buys 2,000 candles at once, he will get a special price of LKR 9 each. The manufacturer will also give Sena 60 days to pay the bill.
To Sena, being a simple guy, this sounds like a great idea. By buying candles at just LKR 9 each his gross profit on each candle jumps 10 percent to LKR 11 (LKR 20 minus LKR 9 cost). Furthermore, his break-even is reduced in unit terms to (2,000/11, or 182). Sena is excited and can’t wait for his higher level of profits to roll in!
For the next couple of months, Sena continues to sell 300 candles per month. He feels great about his lower costs, and that he is making a much higher profit. With his sales of LKR 6,000 (300 x LKR 20), his gross profit is now LKR 3,300 (300 x LKR 11), and his net profit is LKR 1,300 (LKR 3,300 less LKR 2,000 fixed costs). So, while his gross profit on each sale has increased 10 percent, his net income each month after fixed expenses has surged 30 percent!
However, in 60 days, Sena has a problem. The bill for the 2,000 candles is due and he doesn’t have enough money to pay for it. He still has lots of extra candles, but it will be many months until his business sells them to satisfy demand.
Unless Sam can quickly sell the umbrellas, or get a loan, or dip into his savings, he will have to default on the payment for the large candle order.

14/09/2016

Excess liquidity around every corner and it’s the mantra of financial controllers in most high end companies these days. What does it really mean? Does it mean that they have money and nothing to do with it?
What does liquidity mean
Let's say you have one Rs100 banknote. It's cash and is characteristically the most liquid asset anyone can hold on to in his life. It's called the most liquid asset because it is readily converted into other forms of assets, goods and services at any point in time. You hand it over to a peanut seller at a corner stand in town for the purchase of Rs 20.00 worth of peanuts. The seller tells you that he has no change and gives back the Rs100 banknote to you. You end up with no peanuts which you were willing to pay for at that point in time. It goes to say that your Rs100 banknote was not liquid at that point in time because it could not be exchanged for the goods you were willing to buy. Even your cash was not liquid at that point in time . This is the basic concept of liquidity in the economics and finance. When a monetary policy maker talks about liquidity this question of even cash not being liquid at times has to be well borne in mind.

What is the meaning of excess liquidity in the economy?
Mind you I said 'liquidity in the economy' and not 'liquidity with banks which is a total different kettle of fish and will be explained in a separate bulletin.When the growth rates of money supply exceed the growth rates of the economy it is said that there is a surplus of money circulating in the economy. That excess is called excess liquidity in the economy. In other words, the surplus is in the hands of the public and as such it is a potential inflationary force in the economy.
If the surplus keeps growing over a protracted period of time (also technically referred to as a monetary overhang) it becomes a cause for policy concerns. The CBSL (Central Bank) would then have to mop up the surplus by issuing treasury bills in order to stem this source of inflationary pressures. If holders of the liquidity do not find the yields on the bills attractive they don't buy them and the CBSL would be unable to mop the surplus.
In that case, the CBSL Monitory Board would have to decide for an increase in the repo rate as a result of which the yields on the bills go up. Depending on how attractive the yields will be, the CBSL would succeed in mopping up the excess liquidity. The potential source of inflationary pressures would be eliminated and the growth of money supply would thus be brought in line with the growth rate of the economy. (Note that this is a very simple illustration. Sometimes even when there is no surplus the Monitory Board might decide to raise the repo rate in order to curb credit expansion and prevent an overheating of the economy. I'm not going to dwell in intricacies here.) Simple as it appears, this is a highly technical exercise that requires intense econometric skills and years of experience in monetary, financial and economic analysis and we all wish that thinks happen in these lines.

05/06/2016

Power of debt
Every rupee that you carry in your in your pocket is just a promise that the government will provide you with a certain amount of value. The government used to back up this promise by holding gold in its vaults. Since the gold standard has been removed, this promise has become a lot more difficult to measure but the vast majority of people still accept it at the value (therefore, it has value.)
Money is just a debt that’s owed to you by the government. The government uses it to make sure we’re not all stuck trading real commodities like food for everything we need in life. It also affords the government to have a bit more control over the things that happen with the money supply. When you think about it, this debt controls virtually everything in the world.
Two major ways of achieving money
The goal for businesses and people when discussing finances is pretty simple. You want more money to be owed to you, than money that you owe to people. That means that you’re making money in life. That can be achieved through two major ways.
The first is to increase the money owed to you by other people. That can be through many different ways from working hours, to selling products, to providing someone money at a long term cost.
The second way is to decrease the amount that you owe to other people. That is something very common among people without a lot of money. Middle class families are particularly good at cutting back the amount of money they spend and owe every year. While the statistics may be getting worse for the middle class every New Year that passes, however they still are known for spending and living with less money. Poor people tend to owe a lot of money compared to what they make. Many take up as much debt as possible. Rich people often have a similar strategy to poor people but they have a very clever strategy for managing it (or they go broke eventually.)
Why debt is positive
Debt, being a promise, is something that’s unbelievably powerful to use in life. The amount of debt you’re allowed to take out is kind of like the amount of trust people have in you. Just imagine the difficulty of doing anything in life with someone that doesn’t trust you very much.

Good and Bad debt
Most financial advisors will tell you to eliminate your debt. This is because most people don't understand the difference between good and bad debt. The average person has only bad debt, debt incurred by purchasing liabilities like Lifestyles, TVs, cars, and houses.
Good debt uses other people's money to purchase cash-flowing assets. For instance, when I purchase n investment property, I use the bank's money to pay for most of the asset and it has had positive returns which I couldn’t even think of. Other benefits of investments using debt include tax advantages and a higher return on my investment (ROI) because I’ve used less of my own money to purchase the asset.
Rather than look to reduce all debt, find ways to reduce your bad debt and grow your good debt to help buy or build assets.
Start today, and do it every day

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