July 6, 2021
6 minutes to read
Opinions expressed by Contractor the contributors are theirs.
Most often, loans are viewed negatively. The mention of debt is often accompanied by horror stories of bankruptcy and other theaters of financial distress. It’s no wonder, then, that people tend to view loans as a last-ditch effort to pay for emergency expenses. But is this bad reputation justified? After all, if a loan can save a dying business and, in turn, help secure a profit, it is a wise decision and often a must. Of course, there are also cases where borrowers are faced with the inability to repay a loan, but as long as the liabilities and forecasts are carefully planned, good debt can be a lifeline and can be used on top of that. for the organization of investments.
When you “leverage” debt to maximize return on your investment, you are, in short, using lower rate borrowing to generate higher rate of return. While there is a risk of losing capital, going into debt for profit is an often underrated way to make money. Once you’ve revamped your risk appetite and perhaps changed preconceptions about lending, it is possible to turn debt into profitable investment vehicles.
Five relatively safe ideas to get you started:
Related: What Does Return On Investment Really Mean For Entrepreneurs?
1. Flip a house
A tactic that generally applies to buying and selling homes, flipping can also be done with rented units. The idea is simple: find apartments below the market price, make improvements and sublet them at a higher rate, and the difference between the rent and the sublet price becomes a profit. If you find the perfect apartment to knock down but need urgent funds to close the deal, it may be a good idea to get a loan.
You can, of course, apply at a retail banking institution, but this process can be tedious and time consuming. A faster alternative can be a home improvement loan from an online lender. With these funds, you can do everything from complete renovations to reallocating an existing unused space or spare bedroom in your apartment (then subletting it), to turning your garage into a music studio. or in coworking space for rent. You can also use a quick loan to buy furniture and other essentials that can qualify for a limited time discount. The goal is to make money with the sublet sooner, which offsets the interest paid on the loan.
Related: # 10 Simple Steps To Getting A Business Loan
2. Invest in precious metals
The prices of commodities like gold and silver generally fluctuate with the economy and are often directly proportional to it. For example, gold prices in mid-2020 hit record highs due to economic uncertainties, even as stock markets collapsed. This is partly why gold and silver are considered reliable investments. The trick, unsurprisingly, is to buy on a downside and sell on a rise. Based on past evidence, a recovery from the trough usually only takes a few months, and those who regularly invest in precious metals for profit are quickly able to predict changes with a good level of accuracy.
Because of the time sensitivity inherent in this investment, you need to have money for deployment. In this case, depending on how much profit you expect, it may be a good idea to get a loan early (preferably the same day) and grab an opportunity. Delay can cost you significantly, eat away at profits, and defeat the purpose of the loan.
3. Buy cryptocurrency
Bitcoin, Binance, Ethereum, Dogecoin, and many other cryptocurrencies vie for investor attention and money, sometimes offering mind-boggling (albeit highly unpredictable) profit margins. Again, the principle remains the same: buy low and sell high. If you have invested well in the stock market, predicted how geopolitical events will affect the economy, or simply identified trends, you can apply corollary skills to effectively trade cryptocurrency.
This is also an urgent matter, with the slightest delay translating into a massive drop in profits. So a timely loan can boost a bank balance like few other current investments. That said, retail banks might not be the right channel to obtain loans for this purpose, due to the urgent nature of the investment and the inherent caution with which they analyze it. But, a credible lender who can process short term loans quickly could be the difference between a huge profit or a disappointing transaction.
Similar to cryptocurrency trading, you can also invest loan funds in forex trading or stock trading.
Related: Learn Profitable Stock Trading Strategies in Just Two Hours
4. Grow your business
If you are a small business owner, you know it too well: to make money you need to invest in the business. To grow at scale, reach more customers, and sell more products or services, your business may need a cash boost quickly and at the right time. This injection could be used to hire better talent, change the brand identity, go digital, expand office space, or double a marketing effort.
Most of these actions are short term, as they will produce results fairly quickly. Such short-term, limited-impact actions can benefit from small business loans from traditional banking or financial institutions, government agencies that promote small businesses, or legitimate online lenders. An appropriate percentage increase in sales or employee performance can pay off in a matter of months, making the loan a lucrative business.
Related: 5 Best & Quickest Small Business Loans (Some You’ve Never Heard Of)
5. Learn a skill
One of the most underrated investments is in perfecting yourself. The job market is volatile and the demands keep changing. To stay relevant, expanding skills is essential. Now, getting a loan to learn a new skill may not seem appealing at first, but such a move can pave the way for a better paying job or promotion to a current job – a relatively quick and lasting return on investment.
The key is to learn skills that are of real interest. When you really enjoy doing something, you’re more likely to get good at it and then monetize it. While computer programming can be a lucrative career choice, if you don’t enjoy it you’ll be unhappy, which will impact productivity in the process.
You can also use this trick to start a side gig – freelance projects like selling art or crafts at home. For example, you could learn to crochet or carve and then make unique and financially viable products in your spare time.
In all of these scenarios, be sure to learn all the terms and conditions of the loan, only borrow from a reliable source, have realistic expectations of profit, and plan for the worst case scenario; even if you are not able to make a profit, you should still be able to repay the loan.