FINANCE AND INVESTMENT TIP NO. 1 – INTEREST TOO HIGH

AFTER A LONG TIME OF DISAPPEARANCE, I WILL NOW CONTINUE MY WEEKLY INVESTMENT AND FINANCING TIPS. THAT MEANS THAT EVERY WEEK – USUALLY ON WEDNESDAYS – YOU CAN ACCESS INFORMATION HOW TO INVEST BEST. I WILL ALSO INFORM YOU HOW TO FINANCE PROJECTS BEST THAT YO U INTEND TO INITIATE.
BECAUSE OF A CURRENT PROBLEM, HERE IS MY FIRST TIP.
THE “MENZGOLD-SAGA” HAS SHOWN ONE THING, APART FROM ALL THE DISCUSSIONS AROUND IT. TOO MANY PEOPLE ARE ATTRACTED TO HIGH INTEREST RATES FOR INVESTMENTS WITHOUT REALISING THE DANGERS BEHIND THEM. IF SOMEBODY OFFERS YOU AN INTEREST OF 10% PER 3 MONTHS, THAT WILL BE 40% PER YEAR. THIS IS EVEN CALCULATED WITHOUT CONSIDERING CUMULATIVE INTEREST. (CUMULATIVE INTEREST IS CALCULATED IF YOU RE-INVEST ANY INTEREST YOU EARNED IN A CERTAIN PERIOD). THE FINANCIAL INSTITUTION MUST FIRST OF ALL EARN THESE 40% INTEREST.
AS THE PRIMARY BUSINESS OF A FINANCIAL INSTITUTION IS TO LEND MONEY, THEY WILL OFFER LOANS WITH AN INTEREST RATE OF ABOUT 60% PER YEAR. THIS IS BECAUSE THEY MUST MAKE PROFIT. IF THE BORROWER AT THIS INTEREST RATE CANNOT PAY BACK THE LOAN, THEN THERE WILL BE PROBLEMS. IF THAT HAPPENS TO MORE BORROWERS, THE INSTITUTION WILL GET INTO TROUBLES. THERE WILL ALSO BE THE CONSEQUENCE THAT LESS PEOPLE WANT TO TAKE LOANS AT THIS INTEREST RATE.
CONSEQUENCE OF THIS WHOLE SCENARIO WILL BE THAT THE FINANCIAL INSTITUTION WON’T BE ABLE TO PAY THE HIGH INTEREST RATES ANYMORE. THIS WILL LEAD TO A DEFAULT OF THE FINANCIAL INSTITUTION TO FULFIL THE CONTRACT. AT THE LONG RUN, IT WILL EVEN NOT BE ABLE TO PAY THE PRINCIPAL INVESTED SUM. YOU SEE, IF YOU ONLY LOOK AT THE INTEREST RATE OFFERED, YOU WILL SURELY GET INTO TROUBLE.
ALWAYS KEEP ONE PRINCIPLE IN MIND: “IF SOMETHING LOOKS TO BE TOO GOOD TO BE TRUE, IT IS SURELY TOO GOOD TO BE TRUE.”
NEXT WEEL, I WILL DISCUSS ANOTHER WAY OF MINIMISING YOUR INVESTMENT RISK, AND THAT IS DIVERSIFICATION.
STAY TUNED!

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