EXTRA EXTRA CREDIT: MORE LOANING AND OWNING

For those interested, here are some more loaning or owning examples.  See how just about every investment you can imagine breaks down into one of these categories.

If you buy a 10 year U. S. Treasury note, you are loaning.  You are loaning the United States federal government money.  They will pay you interest for the use of it.  This is how you make money.

If you buy a commodities contract of 1000 barrels of crude oil, you are owning.  You are betting the price of oil will go up before the contract comes due for delivery.  This is how you are making money.

If your friend asks you for a $10,000 loan to start a business, you are loaning.  The 6% interest he says he’ll pay you is how you will make money.

If your friend asks you to invest $10,000 in his new business as a 50-50 partner, you are owning.  You are betting the business will be profitable, and you will share in the profits.  This is how you will make money.

If you invest in a bond mutual fund, you are loaning.  The fund is buying a mix of bonds in corporations and /or U. S. Treasuries, which will pay it interest, which it distributes to you.  This is how you make money.

If you go out and buy 10 one ounce pure silver Canadian Maple Leaf coins, you are owning.  You are betting the price of silver will go up in the future.  This is how you will make your money.

If you invest in a stock mutual fund, you are owning.  The mutual fund is investing in shares of corporations, which will pay dividends out of profits, and hopefully the company and its shares will go up in value, and this will be distributed to you.  This is how you make your money.

If you invest in a balanced mutual fund, you are loaning AND owning.  The mutual fund will invest in some bonds and / or U. S. Treasuries (loaning) which will pay interest.  It will also buy shares in stocks (owning) which will pay dividends and hopefully increase in value.  The interest, dividends and increased share value will be distributed to you.  This is how you make your money.

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