Tag: Principal

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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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Investment Partnership™


The world of investing is full of variables, risks, challenges, surprises, and of course, rewards.

Most people delve into that ocean, preoccupied by the lure of quick riches, overnight fortunes. They turn a blind eye to the other side of the coin; the risks, the great potential of losing one’s money, or part of it.

That’s why, the first rule in mindful investing is: Never Lose Money (Ben Graham). In other words: Preserve your capital, take reasonable, calculated risks.

One way to tackle this paradox is to work with an expert. That won’t be a money or fund manager. It’s a partner, who would go with you into that ocean, and help you reach the island of safety, and prosperity.

An “Investment Partnership™” is not a very common phenomenon. Actually, it’s rather rare, if not unique in the investment world. That’s why I consider it a new and innovative concept. The way it’s presented here is covered by the copyright provisions of this blog.

You and the expert set some terms and conditions. But the key idea is this: The client provides the investing money (principal), and the expert provides the time, the work, and the expertise. They are partners in both profit and loss on a 50/50 basis.

If they made profits, it got divided between them. On the other hand, if they lost, the client would lose his/her money (or part of it), and the expert would lose his time and effort. Most often, they would make profits, since the investment activity is based on careful strategies that take into account the potential risks, and provide safeguards to minimize them as much as possible. Preserving the client’s capital is the highest priority of the partnership.

The big and clear advantage to the client would be peace of mind, and freedom from the complexity and details of the investing process. Additionally, he or she would enjoy high profits without spending any time or effort.

The expert, on the other hand, who brings his expertise, time, and energy into the activity, doesn’t work as an employee. Rather, he is a partner. He only gets paid if he makes a profit. This gives him the right motivation and inspiration to choose the best possible investments. That’s how he generates his income, and at the same time, maintains and improves his credibility as a trustworthy and reliable investment professional.

Happy Investing to All…

The Wealth Maker