He was my coworker. I know him at work for years. It is unlikely he take money and run away.
He ask me a loan to scale up his business, promised to pay 15% annually.
His work is in manufactures industry, maybe B2B. He said he his business don’t depend on number of customer available. I don’t know. I am a salary man. I know nothing about business and investment.
I haven’t ask him into the detail yet. I know nothing about this type of business. He seem confident, but I feel the 15% is so unlikely that will come with (hidden) risk. Maybe my friend is also a victim of another scam, or he just overconfident.
People of Lemmy, I ask you, those who are investor and business owner: is >= 15% annually ROI possible ?
his business don’t depend on number of customer available
Clarify this with them. If the business does not depend on customers and selling a product/service to them, then it’s most likely a pyramid scheme/MLM. If he continues to be vague about what exactly the business is, that’s another red flag. A legit business shouldn’t be hard to explain, especially to people they want to ask for investment from.
It’s a scam, or he really believes it and it’s even worse.
I think I should pull him out of this for his own good.
Get it in writing.
But yeah, it’s sketchy as fuck. If he could guarantee that ROI he could just go to a bank.
If you can afford to lose the money and maybe tolerate a lengthy trial go for it. Personally I couldn’t.
The reason he can’t go to the bank because he have take enough loan and can’t take anymore. He said I can make money by apply for loan against property, and loan to him and pocket the different.
It seem that he want to take more loan than the bank want to give him.
Yeah it seem risky as fuck. So i am asking.
That sounds sketchy af. I would run, FAR …
So he wants you to take a loan out using your property as collateral to invest in his business? And if he doesn’t get you the promised return, what do you think happens to your collateral when you can’t pay back your loan?
If his business would be viable, banks would give him loans up to a reasonable amount.
If he can’t pay back the bank loans, how will he be able to pay back yours?
That’s not how that works. For a business, if he can show the bank his business plan, they’ll loan him whatever they think he can afford to pay, and at a lot better rate than 15%. The fact that the bank isn’t suggests they think he’s full of shit.
He said I can make money by apply for loan against property, and loan to him and pocket the different.
You never give loans to someone that you’re not completely prepared to write off. You absolutely don’t give loans with loans (unless you’re a bank and getting those loans from a central bank, which I doubt you are).
Absolutely do not take a loan out to loan to him
Anyone who would suggest this does not have your best interests at heart
It is probably a scam, but maybe not. Ask him to explain the business plan to you and show you the numbers. If he is unwilling it is definitely a scam.
Not too good to be true, but too good to be low risk.
15% ROI is definitely possible. Him screwing up and ending up bankrupt is also possible.
The red flag for me is “I know nothing about business” - you can’t judge the risks. You should absolutely not invest money you can’t afford to lose into risky stuff like this. In particular, taking out a loan just to loan the money to your friend would be a really stupid idea, and if he asked you to do that, he either is stupid, reckless, or doesn’t care if you get hurt.
I’d only consider loaning my own money with which I can afford taking the risk, and only if he could plausibly explain what he’s doing, and I felt like I can understand it and be confident that he can pull it off. I’d consider it a high risk investment on par with cryptocurrencies.
Given that you don’t seem to fully understand and there are other red flags: stay away.
I don’t need further details to assert “stay away from that ‘opportunity’”
- Ex coworker
- Seemingly Great roi.
That smells like a pyramid scheme from miles away.
When it’s 50% more than the historical yearly average return of the S&P 500, you’re right to be concerned.
I don’t know. I am a salary man. I know nothing about business and investment.
I’ll join the “don’t” crowd then but will also suggest that you should urgently get some financial literacy to avoid “scams” like these. If you really want to invest money into something, your best bet would be an index fund or an ETF tracking an index like the S&P 500 which historically returned on average (very important to highlight the “on average”, because not only does it mean that it can be less but it also means it should be a long-term investment for the law of large numbers to be in your favor, not mentioning that holding for long periods has tax advantages depending on where you live) 10.15% per year since 1957: https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp
Avoid stock picking, options, cryptos etc… (unless you really, really know what you’re doing) and instead trust when people like Warren Buffett tell you to look at index funds or index ETFs instead and to let compounding do its magic over the years: https://www.cnbc.com/2022/10/03/billionaire-warren-buffett-swears-by-this-inexpensive-investing-strategy-that-anyone-can-try.html
I’d suggest you buy a book like “The Psychology of Money” by Morgan Housel (very good one) and to read it before you make any investment decisions.
thank bro,
The risk is that the business fails. There are no “sure thing” investments, especially at higher returns.
Ask him how his business can fail. If he doesn’t give you a variety of possibilities and ways he’s hoping to prevent them, I’d be very worried that he’s overconfident and not prepared for difficulties.
If they had convincing evidence that they could produce 15% return with low risk, investors would be beating down their door.
85% chance it’s an MLM, 14.9% it’s another dumb business idea and you won’t see that money again regardless.
Don’t be a fool OP. He’s either involved in a scam by his own foolishness and doesn’t know it or he’s the scam.
You’re not a bank, the details don’t matter. Don’t even bother with getting anything in writing from someone who is over leveraged, because you’re already never getting that money back in any court regardless since the other creditors come first.
Stay away. There is a 0% chance this will end up working out positively. If he brings it up again after you refuse, set hard boundaries that you don’t want to talk about it and you won’t entertain any further financial offers or advice. If that risks damaging your friendship then it’s a “friendship” that needs damaging.
Sorry to hear your friend’s gotten sucked into some investment cult.
Is this a loan? At fifteen percent interest?
Don’t mix friendship and money.
Yes, it is a loan.
But the 15% is so high, i don’t think i come without risk. I just ask to know if it is possible to run something with more than 15% ROI, to be able to repay the loan and get interest for yourself.
I wouldnt ever loan money to a person who are not disclosing the riscs.
Someone is getting ripped of here. Could be OPs friend even.
It could very well be the friend being scammed.
