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I have been contemplating about this lately, cause I just noticed the increased in the number of these [online loan apps](these are apps that you can use to access loans online without going to the bank) here in Nigeria you can access any amount of loan just by using this apps, with little or no documents needed just your [BVN](Bank Verification Number, it's a unique digit assigned to each customer and it links all your bank account. your [NIN](NATIONAL IDENTITY NUMBER, a unique digits that is link to each citizen in Nigeria) and still you get to see many of them in pop up ads.
The issue of credit in the economy is like blood to the body, it’s more like buying and selling which is the only medium through which money is created thru Profits and in the case of borrowing through interest …
Robert Kiyasoki gave a simple logic into how money is created through borrowings he said when I borrow you money it Is not taxed know why? Be cause that is how money is created, only when it is lend out because money is debt that’s why it cannot be taxed and so the banks loves it when people borrow lots of money that is the way they make money without been taxed.
And so he said it’s simple to create wealth for yourself, for instance of I borrow money from the bank and I use that money To invest in stocks and buy assets I have invested that money to in a channel that creates more money for me, and so at the end of the day the capital plus interested is generated through the invested channel and I pay back to the bank and I plunge back the rest.
Meanwhile the poor class will borrow money waste same on liabilities-; buying houses cars, pet leisure living etc.
So for banks to remain in business they must and have to issue out loans, most times they do this in different persuasive ways to lure you to borrow whether you really need it or not, so they make money off you taking this loans.
This is the same ideology most investors have understanding how money works in an economy... that's why it's called a currency it's only relevant when it is in flow like current,money changing hands, also called credit multiplier.
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If you change the narrative of how banks operates and place yourself there, you’d see how easy it will to build wealth, definitely you know that banks primarily makes their money through issuing out loans as they do not engage in other forms of business as guided by regulators but to safe guard people’s funds and valuables except for the [UNIVERSAL](banking clause that allows banks like commercial banks render other services beyond their jurisdiction.) otherwise it's just the safe keeping of people's funds and valuables.
If you own assets like houses cars, yacht, boats you get to pay tax on them plus the cost of maintenances but if you turned that into investment asset which is a form of lending y of ur money to these companies and they get to pay you returns by using your funds to grow their business.And so if you borrow out your money you get return’s with no taxed fee , but if you used same money to start up a business no matter how small, the government will come feasting on you to get their tax cut as if they lend you the start up Capital for it, I’m not saying either is better, as they both comes with a level of risk to assume
Risk is a fundamental part of investment one must fully understand before diving in, it’s to develop a sound strategy which will be formidable to hold you down like a cushion to support you totally so you don’t fall out if business completely…in my next post I will talk about risk in business
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😲 wow... impressive journey...thanks buddy 🥂 for these track record 😊
You're welcome @eminentsam48! Have a nice day 😊👍