Friday, October 27, 2006

Opportunity - Power of Capital

Finally I have the time to put all the though in word after finalising the idea and getting some comments from 3 of my close friends. All agreed that the idea sure make money with minimal risk but all of them have the problem of getting the money as capital due fact that in order to borrow money from peoples you must be trustworthy. Even from parent, brother, sister, relatives and friends the more they trusted you the more money they are willing to take out from their coffer to loan you first.

Classic example will be "Hey Mike! Can you borrow me 10 buck or pay for my meal first I forgot to bring my wallet! The reply will be sure no problem without even thinking (10 buck only ma since friend for 10 year lioa). However if you asked "Mike can you borrow me 10k for me as capital to open my business" sure he will think twice (my 10k FD mature tomorrow earn me 25 buck a month but borrow him got no interest cause embarrassed to ask, plus if his business fail then when is him going to pay me back? Some more i got experience borrow close friend 1k that almost caused my friendship when ask him to payback) and answer "I do not have that much money and many other excuses" as the smarter choice. Here come my idea to fill the gap of no confidence and trust. Before i go into detail of my idea let run through the meaning of CAPITAL.

Exert from Online :
Capital in this article is not the city or town but the wealth, whether in money or property, owned or employed in business by an individual. Any form of wealth employed or capable of being employed in the production of more wealth. While Moneyed Capital is the capital that consists of or represents money that is used or invested (as by a bank or investment company) for the purpose of making a profit on it as money

My idea of this Opportunity of Moneyed Capital will need Hard Cash or $$$, the more you managed to gathered the more Return of Capital Investment you will be able to get. Ask it from your parent, bother, sister, relatives and friends, how many of them and how much money that they put in our normal bank FD payout at 3% p.a. interest monthly. They will be your target people and their money in that FD will be your Capital for my idea.

This is how it works, sell them the idea that you wanted to start up business let put the example 100K as start up capital.

Capital borrowed by your sponsors to you can enjoy:-

  1. Guaranteed return to them with interest of 4.5% p.a. which is 1.5x higher than normal FD payout. Payout of 375 buck in interest will be made monthly to them.
  2. Reward with the possible extra bonus return of 4.5% to 6% p.a. interest that equal to 2x earning than their normal FD rate when you make extra profit. (will discuss with anyone interested in detail; on how and depend on your willingness to reward your borrower)

Term and Condition will be :-

  1. You can assure them Guaranteed Capital Repayment if they wish to withdraw but must be after 6 month period otherwise 0% to 2% loss might incur on their capital. (after 6 month the 2250 interest will be their with Capital of 100K returned)
  2. Asking and informing them to allow you 10 working days for their capital investment to take into effect and 10 working days for you to prepare the check if they want to cash out after 6 month.
  3. Telling them also that if the Political, Economic, Social and Technology environment changes affecting your business you can opt to return them their 100% Capital Investment together with nearest maturity date interest. ( I will discuss how PEST affect my idea in my coming posts) Otherwise you might got better entrepreneur idea you can use their capital as your stepping stone for your business. That I would not guaranteed return as you already being able to stand on your own feet but remember to pay them 4.5% interest minimum and considered 100% capital payback to them if they asked for it .
My idea of Moneyed Capital will works this way assuming you gathered 100K; the return on investment must be higher than 4.5% p.a. to pay your borrower. My Moneyed Capital idea that I discovered able to get a guaranteed return of 7.1% with the risk of extra bonus profit/loss of 1% to 5% variable depend of the PEST changes that i mentioned above.
Let me simplify this into number :-
1 Month
Capital 100K
= Means that I get 591.67 buck monthly minus 375 buck that I payout to borrower
= 216.67 buck was what I will get monthly on others money.
continously for 6 Months and he/she decided to cash out
Capital 100K
= Means that I get 3,550 (591.67x6) minus 2,250 (375x6) that I payout to borrower
= 1,300 (216.67x6) was what I will get in 6 month on others money
= 100K (variable of +1% or -1% for example)
Possible profit = 2,300 (101,000 + 1,300 - 100,000) or
Possible profit = 300 ( 99,000 + 1,300 -100,000)
continuously for 24 Months and he/she decided to cash out

Capital 100K
= Means that I get 14,200 (591.67x24) minus 9,000 (375x6) that I payout to borrower
= 5,200 (216.67x24) was what I will get in 24 months on others money
= 100K (variable of +1% or -1% and +5% or-5% for example)
Possible profit = 6,200 (101,000 + 5,200 - 100,000) or still
Possible profit = 4,200 ( 99,000 + 5,200 -100,000) base on plus minus 1% while
Possible profit = 10,200 (105,000 + 5,200 - 100,000) or still
Possible profit = 200 ( 95,000 + 5,200 -100,000) base on plus minus 5%.
Interested and curious how I make it possible, are you a loan shark? (Definitely no) As all the income is legal but I would not just reveal like that because I would like to leverage my knowledge and share the though with the one; would be entrepreneur. Many may wonder what and why the risk of 1% to 5% profit/loss I mentioned above and included in the formula calculation.
My condition is simple, gather yourself 10K and treat me coffee and I would share my trade secret with you. There was a lot hidden benefit in the money get money society believe it or not; as I will reveal it later in my other post. By the way, anyone want to challenge my idea is wellcome as I believe prove of living example will be the best or the other words; Action Speak Louder than Word. For sure you all know how to reach me. Adious!
P/S : Moneyed Capital = Robert Kiyosaki Lesson No1 - Let the Money Work for You


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