Financial Planning through Business Loans
Every individual in the entire world is in the race of becoming successful. Among the ways in which one can grow is through savings as well as investments. Savings is on sure way through which one can be exact in relation to where he or she will be in a given period of time. Where one, for example, decided to be saving $5000 per month, one can consequently have up to $60000 by the end of the year. In case one decided to be investing the same amount of money, there are high chances that the worth of the business will be more than the quoted amount. In a period of five years, while the savings may be $300000, the investment may be worth more than a million dollars.
An investment earns profits which could be a big proportion of the capital while savings earn interest which when calculated monthly may be minimal. As one invests more in a business, the bigger the chances of that business realizing even bigger profits and hence growing even bigger. As a result, most individual prefer acquiring a loan where they finance the business, and then pay back the loan using the profits combined with their other sources of income.
Wise individuals always acquire loan to maximize profits and then use the profits with the help of the cash they used to inject into the business to repay the loan. Most individuals will pay the loan with the money they have been injecting into the business and some of the profits acquired from the new and bigger business. He or she can then reinvest the $2000 on top to the business increasing the profit margin to $5000.
In the process of growing the business, one has two major options. One can either opt to pay the minimum amount to the bank and reinvest the rest of the profits into the business or decide to pay the bank first and then embark on reinvesting the profits into the business. In a case where one opted to pay the minimum amounts to the bank, chances are that. One can easily oust the amount earned by the loan as interest by reinvesting in the business and paying the minimum amount to the bank in terms of the loan he or she owes the bank.
It would, therefore, be wise to ensure one evaluates the two options and settle for the best. It is only through evaluating the cost-benefit of each and every move to come up with the best option. As a result, one can come up with the decision of whether to repay loan instantly and get back to reinvesting later or to first re-invest and pay the loan slowly.
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