Posted by: The Soaring Eagle | September 19, 2012

The Wealth Algorithm (5) – Financing Your Dream!


 

We’re now ready to tackle the process that will take you from your current financial state (networth) to your dream (the clear intention you set few posts ago).

I’m not going to use any assumptions concerning your work status. So whether you were employed, self-employed, unemployed, running a small business, etc, our discussion would start from the networth we calculated in article (3) of this series.

There are so many ways to make money. I’ve covered a number of them in this blog. You could go back and pick the one that suits you. We’ve talked a great deal about value investing, making money online. I touched on HYIP’s. Then finally spent few articles exploring online trading, including binary options trading.

Any one of those requires an initial investment, a capital, a principal. Each method employes a certain technique to grow that capital, while preserving it (this is quite important).

The question now is this: How would you go about securing that principal?

In general, there are two ways: You could either borrow the money, or create a partnership.

The first route includes banks, friends, family, government funds, etc.

The second is a sort of business deal between two equal parties: One party provides the capital, the second provides the time, energy and expertise to grow that capital.

The first option could be difficult these days. Requesting a business loan from a financial institution (like a bank) presents two major hurdles: a) you must provide enough evidence that you’re capable, financially, of returning that loan, at the end of the term. The bank doesn’t care whether you succeed or fail!

The second issue is interest. You might end up paying 50% on top of the original loan in interest. If the loan was $100K, you would be required to pay back $150K at the end of the loan term. Those 50K would come out of your net profit. In some cases, the percentage could be more, depending on how convinced the bank would be of your eligibility for that loan.

Asking friends or family members for financial support to start a business or enter an investment adventure, would raise many eyebrows, and would put you under the spotlight for the duration of your journey. This would add to the pressure, and would exhaust a good deal of your energy.

In the next article, we’ll explore the second option, as I believe it’s the path you should take.

The Wealth Maker

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