Many take a personal loan to buy a new phone, a new gadget, new shoes, or to travel and the like. Enjoying borrowed money for the leisure it brings, everything is great until you’ve noticed your debt is filling up one after another.
Borrowing money for something that gives you satisfaction can be a bad thing when that debt slowly eats your fat purses. That’s bad debt for you.
We were used to borrowing money to get the stuff we want.
You’ve got to understand that borrowed money is other people’s money. You are paying back interest for borrowing their money.
If you end up borrowing money then buy items, products, or services that don’t give you money in return, you are at the losing end. You are paying more than what you borrow, that’s why you’ve got to use borrowed money the right way.
Using borrowed money is a common thing in growing businesses and mirroring such concepts in your personal life is feasible enough when done right.
In applying the concept of borrowing money to make money, You
must know the advantages and disadvantages of doing so.
Advantages of Personal Loan
● You are in control. Other types of loans, such as auto loans, for example, will serve a specific purpose of buying a vehicle. In a personal loan case, you can use it the way you like.
● Decent interest rate. Personal loans are often cheaper than credit card loans.
● You have plenty of time to pay. It means you can use the bulk of the money to make money as you pay a monthly fixed rate.
Disadvantages of Personal Loan
● Fixed payment. You have to pay a monthly fixed rate, It means when you pay late you’ll be charged for late payment fee and when you pay early you’ll be charged for the early payment fee.
● Additional Processing Fee. Borrowing personal loans have a processing fee typically around 1-6% of the borrowed amount.
● Debt Cycle. As long as you have a personal loan, it feels an unending cycle of debt.
Where can you invest your borrowed money?
Knowing where to invest is one thing, and understanding how these financial vehicles work is another.
Let’s say, you bought a stock in the stock market and after some time the stock price goes down. You’ll panic and you might sell your stock right away. If you understand how stock market works, you know that market price goes up and down. Paper loss is just paper loss, you don’t lose your investments until you withdraw it. Stock price will eventually go up after some time.
That’s why you should…
Investing in yourself First
When it comes to money, investing it wisely and consistently is key to growing your wealth.
While there are different financial vehicles you can use, there is one asset we all have in common that everyone should invest in first: yourself.
Investing in yourself will pay huge dividends for you throughout your lifetime. Whether that is a monetary value or just improving your overall happiness.
Investing in yourself means you are putting time, money, and other resources in making your current life and also your future better.
The goal is that you are always improving and building a better life for yourself and your family. By investing in yourself first, you can see an impact on your finances, career, hobbies, and just overall happiness.
When you are investing in yourself, you start to acquire knowledge and other various Skills that will greatly impact your life in general. It’s important because it helps you diversify your knowledge, improves decision-making, helps you be more prepared financially, maximizes your career or business choices, and more.
Now that you know what you need to do first, let’s jump into the next question…
Can a personal loan or credit, in general, make you Money?
Yes definitely. It depends on how you use other people’s money in making more money.
Did you notice? Big businesses depend on investors for capital, small businesses rely on credit in making their business grow, market vendor counts on Bombay or 5-6 in sustaining their business.
You often hear some people say “you need money, to make money.” Then why don’t you borrow money to make money? Does that make sense?
Making money using other people’s money can be a daunting task especially if you’re just starting out.
Before using other people’s money to invest, you’ve got to study where you would borrow money first as you look for the right investment vehicle you can use in making more money.
In weighing your option, knowing how much you would pay for borrowing money and how much you would earn in your investments is necessary.
Let’s identify your Risk Tolerance please answer all the questions below.
7 questions to ask yourself before you borrow money.
- Are you comfortable going into debt for an investment that may fluctuate in value?
- Can you afford to lose the collateral you put up for the loan? Any asset used as collateral, including your home, can be taken by the creditor to satisfy the loan.
- How will you pay for the loan if your investments fall in value? Do you have a secure salary, a cash reserve, or other sources of income?
- What are the terms for repaying the loan and interest?
- Are there any other fees associated with the loan?
- Are the investments you’re buying with borrowed money suitable for your goals and risk tolerance?
- How much will you have to pay in commissions and fees?
7 questions to ask yourself before you invest your money.
- How does the investment work?
- What are your goals?
- What are the risks of this investment?
- How much do you expect to earn on this investment?
- How long do you plan to invest?
- What are the costs to buy, hold, and sell the investment?
- What other investments do you have already?
Done answering all this question? Yes or No?
Do you feel you can make it work? Yes or No?
Already looking for quick cash?
How Can You Receive a Loan Quickly?
Nothing ever gets approved in a flash, but every smooth transaction happens when you begin proactively.
Want to find and compare banks that can cater to your loan amount on just one website?
To make things easier for you, you can compare the interest rates across all banks on GoBear’s website and find the right loan that suits your needs.
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Click on this link and let GoBear help you find the perfect Personal Loan for you.
Making money from borrowed money depends on your capability in managing your finances. Remember that choosing the right partner at hand will make all the difference.
I am hoping you have learned something new with this topic “Personal Loan will make your investment grow if used right.” Till the next blog post!
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