Hey Guys,
Have you ever thought of starting a business?
If YES, then why haven't you already started one…?
“FUNDS”
Most of us think of starting a business but we don’t because of lack of money. We usually plan to study, have a job, work for a few years, gather money & experience, and then start our business ONE DAY, that one day never comes. Many people who dream to be an entrepreneur at a young age do not actually start any venture even when they get old for various reasons like family responsibilities, job becomes a comfort zone, the sector they wanted to start their venture now has a lot of competition and now it has become very difficult for a newcomer to enter, etc.
What if you had money at an early stage? Will you start your business?
The simple solution is “GET A LOAN AND START A BUSINESS” but that is not so simple.
In India debt is considered a burden. A problem rather than a solution. If you talk to your parents, they will have someone’s example who is almost bankrupt and heavily buried under debt and they will advise you to stay away from debt and give you advice FIRST EARN THEN SPEND. They will tell you to stay away from credit cards and EMIs.
I don't deny it completely, as it prevents wasting money on liabilities. Every coin has 2 sides and we will try to understand both the pros and cons of debt in this blog. Robert T. Kiyosaki has distinguished debt between GOOD DEBT and BAD DEBT and we will understand the difference between them.
In a nutshell, if the debt is helping you to generate income then it is GOOD DEBT, otherwise it is BAD DEBT. If you are able to make more money then the amount you borrowed then it is a good debt. E.g. Education Loan, Business loan, etc
But if you're losing money because of that debt then you should avoid it. E.g. Car Loan, Home Loan, etc. Things like houses, cars, gadgets, etc for personal use don't give you money, so it is advised not to waste money on these things, especially other people’s money. On the other hand, assets like buying a house or car for renting purpose, machinery for manufacturing, knowledge and education, etc will generate money and they are worth borrowing money for, because THE MORE YOU SPEND, THE MORE YOU WILL EARN.
This doesn’t mean that you borrow money and invest it in highly volatile assets like stocks and crypto currencies, because if the market crashes then you will be in big trouble. You can borrow money for car or house renting, where the loan is secured and if you are unable to pay the money back the underlying asset will be compromised but your other assets will be safe (pls make sure that this term is mentioned in the agreement, otherwise all your assets will be liquidated to payoff the loan). Talking about business, you can minimise your risk by starting a Company or a Limited Liability Partnership firm.
Conclusion:-
I hope you have enjoyed reading my blog and gained some knowledge. I would conclude by saying that debt is like your life partner. If you are with the right partner, he/she could be your strength and help you achieve great success, otherwise might ruin the rest of your life. The same goes for debt, if you use it to buy assets you could be wealthy and successful but if you use it to buy liabilities, you will live the rest of your life paying emis.
It is like fire which can be used to cook delicious food or burn the entire house.
Thank you for your time,
I’ll see you soon.
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