If you read my recent post, you will know that my wife and I have been talking about investing a lot more lately. Part of that conversation has involved the topic of borrowing money to invest in various business ideas.
I’ve never really been all that interested in the idea of borrowing money to invest, however, it has occurred to me lately that if we want to speed things along, one of the fastest ways to do that is to borrow money, particularly when it comes to capital intensive endeavors like physical product sales.
One thing that we have to our advantage is that we recently sold our house, which has left us with a nice cash buffer to use for whatever we need. That saves us from having to borrow, however, if I am serious about reaching my goals in the time frame I have set, then at some point it is highly likely that I will have to borrow money in the future.
Borrowing money to invest isn’t a new concept. I remember when I first started investing in stocks, I had a work colleague that regularly used margin loans to invest. I never really warmed to the idea, particularly because so many people got caught out with margin loans during the GFC. The whole thing seemed a little too risky for me at the time.
If I do decide that I need to borrow money to speed things up, I’ll have to make sure I understand the ins and outs regarding the rules of the loan. I wouldn’t want to get caught out needing to pay back money in a hurry like the margin loans. Instead I would be looking for a standard business loan, which I understand to be a lot more like a mortgage loan.
One other way of getting a quick injection of funds that I have been thinking about is by setting up a kick starter campaign. I have seen a couple of them recently where people have essentially just asked for money to kick off their businesses. I never really understood why people would give money to things like that, but they do, so it’s certainly worth considering.
What would you do to get some quick capital to speed up business development?