“Again, it will be like a man going on a journey, who called his servants and entrusted his wealth to them. To one he gave five bags of gold, to another two bags, and to another one bag, each according to his ability. Then he went on his journey. The man who had received five bags of gold went at once and put his money to work and gained five bags more. So also, the one with two bags of gold gained two more. But the man who had received one bag went off, dug a hole in the ground and hid his master’s money. Matthew 25:14-30New International Version (NIV)
In the parable above, the master commends the servants who gave him a return on his money. The servant who hoarded the master's cash was called worthless and condemned to outer darkness because of his unfaithfulness with what was entrusted to him.
Using other people's money to make money is older than Biblical history. In fact it is probably as old as all written history because before the invention of money there was no pressing reason to record anything in writing. Most things could just be passed down by word of mouth and stories. The invention of money brought with it the necessity for the creation of contracts to record transfers of wealth and ownership. Some of the oldest surviving examples of written words were part of legal documents.
In present times, there are still many ways to invest using other people's money to make money for yourself. One way I have been experimenting with lately is called interest rate arbitrage, using a peer to peer lending site called Lending Club. Lending Club allows investors or speculators to purchase part or whole interest in unsecured loans contracted by Lending Club.
Anyone who meets Lending Club's requirements can purchase notes on the site. Some states do not allow residents to purchase notes in the primary market, but interested parties can make purchases on the secondary market offered by foliofn.
I have made most of my note purchases through the secondary market because I am looking for loans with shorter terms than the standard 36 or 60 month varieties offered in the primary market. I choose shorter loan repayment periods for the obvious reason that I will get the money back faster. Shorter loans also tend to be safer because they have completed a greater number of payments to date. Lending Club's own internal statistics show that a loan is more likely to default between the first and tenth payment, so loans which have amortized more than 10 months will tend to be safer. Additionally, for the method I describe in the next paragraph, I have to look for shorter term loans so that monthly payments will match more closely to necessary monthly withdrawals. Also, I just like getting the money back out as soon as possible.
Currently, I am experimenting with interest rate arbitrage using zero percent balance transfer offers from some of my currently established credit cards. I now have accepted two offers. One offer is for 18 months and the other is for 24 months, both offer zero percent for the entire term. One thing to be aware of if you try this is the fee for using the service which is 4 to 5 percent of the entire amount you request. Be sure to factor that in up front. Also, don't do what I did and take out your entire credit limit on each card because it can affect your credit rating and possibly prevent you from getting more zero percent offers until you pay down your high balances. I am planning to pay off the entire loan amount by the end of the term, before any interest comes due. Alternatively, it would be possible to transfer balances to other zero percent cards before the zero percent offer expires, but only if you are willing to pay another balance transfer fee. I am planning to pay off the balances monthly payments based on amortization schedules that I calculated on bankrate.com. At the end of the loan periods I should have a positive return on investment that was made using none of my own money.
Using other people's money to make money is older than Biblical history. In fact it is probably as old as all written history because before the invention of money there was no pressing reason to record anything in writing. Most things could just be passed down by word of mouth and stories. The invention of money brought with it the necessity for the creation of contracts to record transfers of wealth and ownership. Some of the oldest surviving examples of written words were part of legal documents.
In present times, there are still many ways to invest using other people's money to make money for yourself. One way I have been experimenting with lately is called interest rate arbitrage, using a peer to peer lending site called Lending Club. Lending Club allows investors or speculators to purchase part or whole interest in unsecured loans contracted by Lending Club.
Anyone who meets Lending Club's requirements can purchase notes on the site. Some states do not allow residents to purchase notes in the primary market, but interested parties can make purchases on the secondary market offered by foliofn.
I have made most of my note purchases through the secondary market because I am looking for loans with shorter terms than the standard 36 or 60 month varieties offered in the primary market. I choose shorter loan repayment periods for the obvious reason that I will get the money back faster. Shorter loans also tend to be safer because they have completed a greater number of payments to date. Lending Club's own internal statistics show that a loan is more likely to default between the first and tenth payment, so loans which have amortized more than 10 months will tend to be safer. Additionally, for the method I describe in the next paragraph, I have to look for shorter term loans so that monthly payments will match more closely to necessary monthly withdrawals. Also, I just like getting the money back out as soon as possible.
Currently, I am experimenting with interest rate arbitrage using zero percent balance transfer offers from some of my currently established credit cards. I now have accepted two offers. One offer is for 18 months and the other is for 24 months, both offer zero percent for the entire term. One thing to be aware of if you try this is the fee for using the service which is 4 to 5 percent of the entire amount you request. Be sure to factor that in up front. Also, don't do what I did and take out your entire credit limit on each card because it can affect your credit rating and possibly prevent you from getting more zero percent offers until you pay down your high balances. I am planning to pay off the entire loan amount by the end of the term, before any interest comes due. Alternatively, it would be possible to transfer balances to other zero percent cards before the zero percent offer expires, but only if you are willing to pay another balance transfer fee. I am planning to pay off the balances monthly payments based on amortization schedules that I calculated on bankrate.com. At the end of the loan periods I should have a positive return on investment that was made using none of my own money.
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