Comparing Saving Your Money To FOREX Foreign Currency Investments:
1. Safety & Security
If the income offsets the additional risk or provides a reserve against which to write off losses when they eventually come, then high yield investments justify themselves, and they do when they are chosen with intelligence, with information at hand on the investment and when they are administered carefully.
Along with this general theory that there is a good deal of merit to investing in high yield opportunities, safety should be stressed.
2. Collateral & Guarantees
A home owner may show you his/her bank account and also prove that he owns his/her home free and clear, so that you conclude that he/she is a good risk whose signature on a note is as good as gold but it is far wiser for you to take a mortgage on his/her home. Or if he/she has securities it is better to have him assign the securities to you than just to take his/her promise to pay.
If a dealer sells you a customer’s conditional sales contract on an automobile he sold on which the customer is obligated to pay in time payments over a given number of months or years, it is well, if possible, to have the dealer guarantee the contract in case the customer defaults. 2 people are obligated to pay, and certainly 2 are better than 1.
3. Provisions For Repayment
If someone borrows $2,000 from you at an attractive rate of interest and promises to repay it at the end of 12 months with 15% interest, the proposition on its face is a bad one. If he/she needs the $2,000 now, what assurance is there that he/she will have it to repay at the end of 12 months? Such a sum is not small. Does he/she intend to borrow from Peter to pay Paul at the end of a year?
Periodic, small payments are a sensible requirement, and it must be demonstrated that the debtor can make these payments out of his/her income when all of his/her obligations are taken into consideration, and these obligations must be known.
4. Responsibility For Payment
Some individual or individuals, or a corporation composed of very distinct individuals must be obligated to pay in the type investment we are talking about. Unimproved land on the edge of the city may be a fine investment. Someday it may double or even triple in value, but what we are trying to emphasize is the type of investment in which there is an obligation on the part of a person or persons to pay a given amount at a given time or in time payments, and you as the investor must look to this person or these persons to pay you on the due date.
The longer a contract runs the less liquid it is and generally the less desirable. You cannot get your money out of it for a long time, and then the business or the business climate may change. The person who lent $10,000 in 1928 for 5 years in all probability had difficulty in collecting in 1933. A demand note is certainly preferable to a five-year note. You may have need for the money sooner than you thought when you made the investment, and if you are tied up for 5 years you cannot get your funds back. Perhaps better opportunities will present themselves. Stay as liquid as possible.
6. Spreading Out The Risk
If you have $10,000 to invest it is best not to put it all in one place into a mortgage for instance. It is far better to put it into 5 mortgages of $2,000 each. The $10,000 mortgage could be defaulted, but there is not so great a probability that all 5 mortgages will be defaulted.
7. Part Time Effort
We are not writing for the purpose of getting a person to quit his/her job in order to devote all of his/her time to his/her investments. We are writing for the person who wants to invest in his/her spare time and look after his/her investments in his/her spare time. The investments described here may in some cases require more watching than others he/she has made, but by definition they must require a minimum of administration on the investor’s part. Payments must be made regularly, and the skipped or late payment must be the exception.
8. Business Functions
You as the investor should not undertake to perform any business function. The only function you should perform, once the investment is made, is to receive the payments, and in the event that payments are not made, you should be able to resort to a simple procedure at law to retrieve your money. If you invest in a filling station you should not have to hire a manager and then proceed to sell gas and oil yourself, under our definition of the type investment discussed here. The filling station should be leased to a major oil company for a fixed rental, and the oil company should perform all of the business functions.
9. Legal Liability
When a debtor can’t or won’t pay, the first thing he/she thinks of generally is some defense against paying you: you had agreed to lend him more at the end of a year, and because you did not lend more his/her business failed. Or the rate of interest you charged was usurious and thus contrary to law; or you really owed him something before you ever lent him the money, and this should be an offset against what he/she owes you. These defenses are used almost every day.
If he/she signs a note, he/she should sign a waiver of judgment note and such a note will be described later. Your investment should not be subject to litigation, and you must be sure of this fact before you make it.
10. Tax Advantages
Certain types of investment are more heavily taxed than others. There is nothing the matter with investing in state and municipal government bonds just because you do not pay any federal income tax on the interest. This is the law, and it works to the advantage of the investor in government bonds and incidentally makes it less difficult for the state and municipal governments to finance their operations. Investments with a tax benefit or tax shelter are more desirable in many cases for the investor than those without such a benefit or shelter.
All of that said…..the Forex can possibly make you rich in months, not decades, like savings can take.
“A penny saved might be a penny earned, but a penny multiplied, makes dollars. Dollars multiplied, makes a living. Dollars multiplied effectively, makes you financially independent!” Michael “MJ The Terrible” Johnson – Founder & Owner – Masters of Money, LLC.
Saving vs Investing – https://www.mastersofmoney.com/savingvsinvesting/
Risk disclosure: *All investments involve risk. Before making any financial or investment decisions, we highly advise that you seek the advice of a properly licensed and trained investment professional.