COLUMN - There are 140 businesses in Japan that have been operating for more than 500 years.
A handful are over 1,000 years old. They have survived wars, earthquakes, tsunamis, depressions and regime changes that would have wiped out almost anything else.
What is their secret?
They hold lots of cash and carry little or no debt.
Morgan Housel wrote about these businesses, called “shinise”, and the connection between debt and longevity. The insight is simple but easy to miss: debt does not just create financial risk; it shrinks your ability to survive unexpected events.
Housel calls this “life volatility”.
The idea is that life throws things at you. A recession, a health scare, a divorce, a job loss. Your ability to absorb those shocks depends heavily on how much debt you are carrying. A paid-off house cannot be repossessed. Rising interest rates do not keep you up at night if you do not owe anyone anything.
The shinise businesses did not survive a thousand years by being the most profitable or the most innovative. They survived by never becoming fragile.
When I worked in unsecured lending at Nedbank, our credit models were built to answer one question: how likely is this person to repay? And they answered it using only financial variables: salary, account history and repayment behaviour.
But the truer picture of someone’s vulnerability to debt is much broader than that. How strong is your support network? How is your health? How stable is your income? How much pressure is your family under?
These things do not show up on a credit application, but they matter enormously when life gets difficult.
This does not mean debt is always bad. Used carefully, debt can help people buy homes, build businesses and create wealth. But it should be taken on with humility.
Housel puts it plainly: debt narrows the range of outcomes you can endure.
Before you take on debt, or more of it, it is worth asking not just whether you can afford the repayments, but how much volatility your life can realistically absorb right now.
The numbers are only part of the answer.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. [email protected]
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