Make Money Financing

While you can’t expect to make what the billions banks make from borrowing other peoples money. You can earn an extra income on the side. The unofficial term would be called the Carry Trade that has been used by hedge funds to make billions down to housewives looking to make some extra money. The idea is to borrow money in countries with lower interest rates and buy higher yielding investments in countries with higher interest rates. Though changing currencies is not at all necessary if you’re looking for a simpler strategy. Which is essentially the same method except you borrow money at a low rate then invest it in a higher yielding note.

When evaluating this type of method be sure to include all commissions, financing charges, and try to map out unanticipated factors. Such as when the fed cut interest rates to virtually nothing at the margins between currencies virtually collapsed. Since then the dollar has been a major currency borrowed against and invested in other countries, such as Australia.

After employing the method myself, the simpler method stated before, I borrowed money on margin (5.99%) and invested in a General Electric note yielding 8.0%. Which is virtually impossible to find since I made this investment. The sense of timing was excellent and I plan to hold the note until maturity and reinvest my earnings into General Electric stock. Even though the opportunity for a similar investment is hardly to surface again. It proves that opportunities will present themselves in the least likely of times to those who act in excavations of what seems like financial ruin. Depending on your appetite for risks I wouldn’t recommend this for everyone.

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