As an entrepreneur, one should always be on the lookout for new ventures and endeavors that help make money regardless of the nature of the source. For example, it is extremely profitable to trust in debts and refinancing or losses as potential moneymakers given the fact that the investor has a penchant for trusting and following through with big risks.
This is so because while these are potential high return options, they are also fraught with huge losses. So much so that, one may lose more money than one had to begin with, thereby starting a huge spiral of increasing debt. Thus, these ways should only be taken up by the mercurial and the intelligent.
Investing on a margin
One very popular way lies playing creatively and cleverly in the stock market by opening a margin account and investing on a margin. In this scenario, one’s broker loans around half of the total purchase price of a stock. Suppose, you want to buy shares worth 1000 and you have with you only 500, then the broker loans you the rest if you choose to open a margin account. If you chose the correct stock which subsequently appreciates, you have the excellent opportunity to receive more than you initially thought was possible with your capital by going into debt initially. However, in case the stock does not perform well, your broker can leave you completely broke if the total stock value you own falls below a set benchmark.
Betting against the market
Another smart way to make shrewd money is by short selling. This is technically betting against the market where you hope that the stock price of a share depreciates. In this method, you borrow someone’s shares and sell them at the current market value. If after sometime the shares lose value, you can buy them back at the decreased rate and repay the borrowed shares and thus pocket the difference in value between the current and the past share value. Investors due of course need to brave the risk of losing more than their investment.
Money from seemingly unprofitable situations
These are not the only ways money can be created from seemingly unprofitable situations. Keeping in mind the capital gains tax that allows the government to charge you for the profit you made on a stock, it is also possible to offset your loss if one was incurred. If an investor loses money on one stock, he or she is allowed to offset the loss if that person makes a gain on another stock option. Say for example, a person loses 1000 on some stock but gains 2000 on some other stock, that person needs to pay the capital gains tax on 1000 and not the entire gain of 2000. One can therefore see that the loss from one source leads to money being saved and hence made from another.
Another popular way to unearth unapparent money is through refinancing. Banks are the foremost institutions when it comes to refinancing. This is done when borrowers run into a spot of bother while repaying loans and other banks or establishments step in and offer better repayment packages often at lower interest levels or at reduced EMIs.
Refinancing pay package
While this seems to be a straightforward loss making venture, nothing is further from the truth. The repayment schemes in a refinancing pay package is different in that a majority of the EMI paid by the borrower is used to pay the interest and not the principal.
This prolongs the closing of the debt on the borrower and he or she eventually ends up paying for more than he or she initially bargained. Secondly, during refinancing there are myriad hidden costs and fees that are charged by the banks and other parties that enable the transaction.
Therefore it is apparent that profit making ventures are not the only way in which one can pocket more money than one started out with. There are examples of millionaires that made their fortunes by correctly utilizing the aforementioned avenues.