Financial Planning through Business Loans
There is nothing that is as fulfilling as growing financially to any individual in the world. There are two major ways through which one can nature his or her finances, savings and 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 saves $5000 every end of month, he or she is guaranteed to have $60000 at the end of the year. There are high chances that one’s investment will be higher than those of the person who saves in the long run. The predictability of savings make many individual opt to save but forget that investment tends to make one net worth even bigger.
An investment earns profits which could be a big proportion of the capital while savings earn interest which when calculated monthly may be minimal. The larger the capital invested, the bigger chances the business will realize more profits and the more the chances its worth will be bigger. Individuals who understand the dynamics of investments versus savings tend to acquire loans, invest and later repay the loan.
An individual who invests $6000 a month may have a loan of $100000 which he or she would then plan to repay in installments of $8000. 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. The remaining profits tend to be reinvested into the business making it grow even as one repays the loan.
In the process of growing the business, one has two major options. One, he or she can reinvest more into the business and pay the initial amount he agreed to be paying the bank and realize more profits as the time continues or pay more to the bank and finish paying the loan faster. 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 is therefore very wise to ensure that one evaluates the options at hand before making any move. It is only through evaluating the cost-benefit of each and every move to come up with the best option. By evaluating the two, one can also inject repayment to the bank and see the effect the move has on the business in question.
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