What Are the Best Ways To Make Money Out of Your Debt?

If banks and lending institutions earn from loan payments and interest rates, why don’t borrowers earn from their debt as well? Personal loan is often used as a way to pay urgent debt or for debt consolidation as it has the fastest processing time and approval among all bank loan services. It may be best for urgent expenses that cannot wait for the borrower's monthly income.

Given the situation, it is understandable that most, if not all of the loan amount, will be spent almost immediately on payments without spare to invest on lucrative activities. However, smart financial management can make the difference and can give you more profit than debts. What are the best ways to earn interest from your borrowed money and pay the lender much sooner than the terms (thus, saving in the process)?

Starting a business can come in handy as an income-generating solution. By using a portion of the borrowed money as start-up capital, matched with a feasible business concept and study, paying the monthly amortization will just be a breeze. The problem is that among the types of personal loan, secured loan is the best choice as unsecured loans have lower credit ceiling. Business loan may produce higher amount perfect for business, but the processing time may take triple the time it will take for a personal loan to get approved.

Being wise in investing in a small business is more feasible as it is more manageable and has faster ROI (return-on-investment). If you are talented with computer and online marketing, you may want to venture in technical services like freelance web designing and technical writing (with manpower reserve for pooling) which can earn you up to $90 thousand (per year) in world market value.

Another way of making money from your bank loan is by investing in mutual funds offered by many financial institutions and hedge fund managers. In this investment scheme, investors consolidate their shares which will be used to invest in other “securities” such as stocks, market commodities and bonds. The fund manager will handle the consolidated amount in principle of buy-and-sell method to earn money. Equity fund is the most used and most lucrative type of mutual fund worldwide.

Buying shares directly from stock or equity markets, on the other hand, gives you more freedom in deciding for your own investment. It is like mutual fund, only more hands on, as you will do the trade yourself (or through a broker you personally hired) with the stock market. You will have more rein in deciding when and how to buy and sell shares. Likewise, the discretion in pulling risks in increasing or decreasing market value is your call.

The biggest setback, however, is that since no particular investment company is handling your transactions and decisions, like what a fund manager does, losing to depreciating value is very susceptible (unless you’re an expert broker yourself).

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James Henry Abrina is an editor, writer, SEO specialist and currently a Corporate Communication Professional, Market Desk Strategist, Business Development Officer and Unit Head for Business Profiles Incorporated.

He currently specializes in security management and business intelligence. Together with the company, he advocates Business Continuity Planning to change how the Philippine business sector sees the definition of crisis response and management.

For more useful information, read his articles at Invisible Squares and Masscom Tutor. Or his EzineArticles page.