Positive Returns on a Loan? Wait a minute, isn't that Investing?

Mar 07, 2016

You need to get some bang for your buck.

Taking out a loan nowadays can be risky business. That is why you must ensure you get positive returns on a loan.

Let's look at what a positive return is

What are positive returns on an investment? Simply put - it is receiving more money at the expiry of an investment than what you put into at the start. That is how the rich grow their wealth. By ensuring that the investments they take on will have a positive return.

So, the question is, can one also get similar positive returns on a loan? Is it possible to lend money, to invest or build something that becomes a positive return in such a way that it can be classified as an investment?

It is of course not possible to grow wealth by only lending money. Loans are expensive. It requires all kinds of fees and then you haven’t even started with servicing the interest on the loan. Fincheck is not trying to discourage you from taking out loans. We simply want to make you aware of the pitfalls surrounding loans. It is imperative that you realize the responsibility you are about to undertake.

A loan must ensure a doorway to increase. It shouldn’t lead to your decline.

Business loans are extremely helpful to entrepreneurs. It can be a launching platform for many types of businesses. The real challenge is to identify what opportunities justify business loans. So is it possible to invest with the use of a loan? It could be an option – but only if you are willing to bet everything you have on the success of that investment. Remember investments are nothing but educated guessing. There is no guarantee to an investment. You must be pretty sure to invest money you don’t actually own into an investment you aren’t entirely sure will succeed. 

Lending money isn’t investing. But make sure the money you are lending is spent on something close to resembling an investment.

The tricky loans to evaluate are personal loans and pay day loans. Usually, these types of loans are taken to finance items and projects that have a shelf life with no promise of income. It is still within your ability to make sure that you extract as much value as possible from that loan. Pay day loans are, generally speaking, expensive forms of credit. With the way the interest rates are climbing, you must make sure to spend your loan on necessary if not dire needs. That thing is worth replacing or financing if it causes financial or personal growth.

Paying interest on something of no value to you is a sure way to cause financial demise.

The principle of positive returns is a key to wealth. Not just financial wealth but personal and an altogether wholesome wealth as well. In the times we find ourselves today, there are smaller margins for engaging in unfruitful activities. The South African economy will be unforgiving to those who don’t understand it. It is wise to keep away from lending yourself into trouble. Rather use the credit you have to engage opportunities that will lead to growth. Educate yourself on ways to gain positive returns on a loan!

Now that you know how to loan responsibly go have a look at our loan comparison page.

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