You have accumulate surplus personal funds of 50 000. You are interested in two option:
option a: placing the 50 000 surrounded by a fixed deposit earning interest of 7% a year
preference b: starting a small business
1.1 the advantages of option A compared to leeway B?
1.2 the advantages of option B compared to selection A?
Answers: Geez, that is a interrogate not so easily answered. I am assuming you enjoy some economic conditions so I wont try to explain every singel detail (but if you have question, feel free to dispatch me an email).
Option A vs. Option B:
A: Option A gives you an guaranteed return on your money. Its that simple. However, the growth of that money may or may not turn into profits. This would greatly depend on the amount of time you plan on disappearing the money untouched in the vindication, and letting compounding interest work its magic. Option A is amazingly close to an IRA account approach to comfortable circumstances management.
Keep within mind that the shorter the legnth of time, the far less the bennifits, as inflation and taxes will eradicate your returns. However, as I said before, if vanished untouched for a substantial legnth of time, compounding interest will overcome both of these, assuming inflation doesnt get epidemic.
Option B: While option A give you limited, slow growth (and set because its fixed), option B give you unlimited room for growth. However, returns are not guaranteed as in next to option A. Truth be told, a untold majority of small businesses fail, beside puts the odds against you to start.
There are also a full host of other conditions to take into tale. For instance, what economic cylce are you within at the time of the start up? What will you be marketing? Are your products elastic or non elsastic? Who are your competitors and how will you diverge from them? Is there a physical need for your products? And the roll goes on and on..
It looks grim, but the reward for taking such a risk (as you know, risk and reward travel hand contained by hand) can pay past its sell-by date many times over that of risk A.
Some questions I would find out first is how close is this personage to retirement and what is their financial situation like. How much debt do they own? It doesnt make sense to be paying 18% a year on credit card debt, and making lone 7% on an investment.
Christian Nago
CEO & Chief Investment Officer
http://www.intrepidtradings.com
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option a: placing the 50 000 surrounded by a fixed deposit earning interest of 7% a year
preference b: starting a small business
1.1 the advantages of option A compared to leeway B?
1.2 the advantages of option B compared to selection A?
Answers: Geez, that is a interrogate not so easily answered. I am assuming you enjoy some economic conditions so I wont try to explain every singel detail (but if you have question, feel free to dispatch me an email).
Option A vs. Option B:
A: Option A gives you an guaranteed return on your money. Its that simple. However, the growth of that money may or may not turn into profits. This would greatly depend on the amount of time you plan on disappearing the money untouched in the vindication, and letting compounding interest work its magic. Option A is amazingly close to an IRA account approach to comfortable circumstances management.
Keep within mind that the shorter the legnth of time, the far less the bennifits, as inflation and taxes will eradicate your returns. However, as I said before, if vanished untouched for a substantial legnth of time, compounding interest will overcome both of these, assuming inflation doesnt get epidemic.
Option B: While option A give you limited, slow growth (and set because its fixed), option B give you unlimited room for growth. However, returns are not guaranteed as in next to option A. Truth be told, a untold majority of small businesses fail, beside puts the odds against you to start.
There are also a full host of other conditions to take into tale. For instance, what economic cylce are you within at the time of the start up? What will you be marketing? Are your products elastic or non elsastic? Who are your competitors and how will you diverge from them? Is there a physical need for your products? And the roll goes on and on..
It looks grim, but the reward for taking such a risk (as you know, risk and reward travel hand contained by hand) can pay past its sell-by date many times over that of risk A.
Some questions I would find out first is how close is this personage to retirement and what is their financial situation like. How much debt do they own? It doesnt make sense to be paying 18% a year on credit card debt, and making lone 7% on an investment.
Christian Nago
CEO & Chief Investment Officer
http://www.intrepidtradings.com
Resolved Questions: