Does money make money? The benefit of having cash backing in business
Have you often wondered whether you can make money using money? It’s possible as you can use your money to invest in other things hence the term investment. The finance industry in South Africa is highly characterised with big financial institutions such as banks and non-bank credit providers.
These institutions have large sums of money which they use to lend consumers. For example banks give loans, bonds to many people and they make profit by getting interests from these consumers. Despite the form of credit that is wanted, whether a debt or a personal loan, the only choice is to go to banks or some micro finance companies that borrow you money and get an interest in return.
Banks combine small lots of savings from many people at comparatively little interest rates and channel them to loans at more expensive interest rates. So in general banks and other financial firms earn better in return than what they would have if they had not given loans. Borrowers also benefit through paying lower interest rates on their loans.
Other aspects where you can use your money to make money is via a savings account which offers you an interest rate around 0.01%. You can also store your money in retirement accounts that would allow you to access your money when you retire as a work.
Another point is to open investment accounts or buy houses that would help you generate a lot of money when people pay rentals to you on a monthly basis.