When you think about receiving a loan, you may think about interest rates and how that debt is going to haunt you for years to come. However, it may be possible to turn a loan into an investment opportunity to help make money instead of making your lender money. What are some ways to turn loan proceeds into a profit for yourself?
Put the Money In a Growth Stock
In an era when money is relatively cheap, it may be a good idea to put the money into a stock that will grow faster than your obligation to repay the loan. In other words, if you make $100 from the growth of the stock and only owe $75 in monthly repayments, you would have made $25 from the loan. That money can then be added to your investment balance, which allows you to make even more the next year assuming the stock grows at the same rate.
Use the Money to Fund Your Own Business Venture
The Internet makes it easy to launch a startup with a small marketing budget and yourself as the only employee. In some cases, you may be able to drop ship your merchandise, which means that you don’t have to carry inventory and absorb the cost that goes with carrying merchandise before you sell it. Depending on the type of business that you want to start, you could being operations with as little as $500. While you might not be ready to quit your job just yet, that money could grow quickly if your business plan is solid and you know how to sell.
Buy a Duplex or Another Multi-Unit Property
If you would rather buy a piece of real property, you could do that with proceeds from a loan. In fact, most people buy properties that are financed by their bank or another lender. Once you purchase the property, there are several different ways that you could make money from it. First, you could rent out each unit and enjoy a passive income that will help you pay back the loan while making money for yourself. Second, you could decide to fix up the property and sell it weeks or months after purchase it. Depending on your financial situation, you may find it best to buy a duplex and live in one unit while renting the other one out.
While some loans such as credit cards or student loans can put you thousands of dollars in debt, some can be used to help you make money. A personal loan invested in the stock market or used to buy real estate could help you climb out of debt and into a future that involves financial growth and security.