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Is 2.5% monthly interest investment too good to be true?

There's a cooperative here that is offering 2.5% monthly compounded interest for savings. Which is a heckuvalot more than banks with their .025% yearly interest and 1.25% six month time deposit. In six months my money would instead grow by around +15%.


Is that normal? I'm also left thinking "Hey wait- instead of worrying about where they make their money, after membership why don't I take a loan instead and set up a food stand business? I've long had this idea about belgian bowl waffles." 


That sounds like how cooperatives reasonably make money. Set up a business and take a cut of a profits, exactly like a bank or a corporation. The difference is just the owners and assignment of dividends.


Except that I have no idea how to run a business. Unhappy I've been saving bit by bit and could afford at least the equipment costs, but employment, installation, trade registration and upkeep is still scary to me. And if I go back to school to take an Entrepreneurship course, I'm going to have to start with saving up again from the start for capital.


... so just putting the money somewhere that I won't be tempted to spend it and just accumulate for at least half a year gives a little bit in return but it's better than losing it all again through personal impulse stupidity.


 


Do you happen to have personal stories of successful cooperatives? What are the signs of a reliable one?

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The interest rate appear to be very high compared to that which we can get from banking type institutions. However their ability to pay such amounts would be proportional to their ability to earn as such what are their lending rates? With this information you may be able to gauge sustainability and virtue of that which is on offer.

As to the concept of your small business ... as one that has always promoted and tried to assist small business I applaud your entrepreneurial thinking. Possibly you should be looking for a venture capital fancier, someone who can assist you fund the project and offer support yet someone who you can payout over time or simply take a share of the profits... this may be worth exploring.

Wishing you the best of luck..

Greg Gibson Owner, Founder and Designer
NewTribeZ.net & NewTribeZ Radio

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Greg Gibson said...
The interest rate appear to be very high compared to that which we can get from banking type institutions. However their ability to pay such amounts would be proportional to their ability to earn as such what are their lending rates? With this information you may be able to gauge sustainability and virtue of that which is on offer.

Oh! Very good points. I'll be talking to them directly and getting their handbook soon. From what I was told, they own a bunch of farmland.


As to the concept of your small business ... as one that has always promoted and tried to assist small business I applaud your entrepreneurial thinking. Possibly you should be looking for a venture capital fancier, someone who can assist you fund the project and offer support yet someone who you can payout over time or simply take a share of the profits... this may be worth exploring.

Wishing you the best of luck..

Thanks for the advice!


I already have a somewhat credible idea of how much this sort of venture could cost from an equipment and logistics standpoint. A simple food stand isn't very pricey. But I have no idea of the rest of managing a business - drafting a business plan, pricing research, business registration, finding a location, employee hiring and management, social security, accounting, the day to day affairs, etc., etc. ... 


When I said it was scary to me, I meant it.


So technically I would be much happier being said venture capital financier. Wink


 


Or working with my hands building franchise kiosks, signage, and sourcing the equipment. Unfortunately a franchise still needs one proof of concept.


Hmm. 

Last update on January 28, 11:56 am by Carlo Marco.
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I understand your fear.. it woudl be more of a concern if you did not have such feelings.

My experience with small business over the last 40 years leads me to believe that very few concepts develop into working models as originally envisaged. In reality improvements in the concept and its application will be needed along the way. Therefor the initial model's realisation will no doubt have its problem but no one will stay the course like the person envisaged concept and has the most to gain from its success like the "creator".
In short I would contend that no one will execute your vision better than you and once created and successfully operated you will have the depth of understanding that I believe all successful franchisers need ... but that is just my opinion

Greg Gibson Owner, Founder and Designer
NewTribeZ.net & NewTribeZ Radio

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Okay, so I managed to get the handbook for the Cooperative.


Warning: following scans will be large.















I'll translate these later.


For now, it seems legit. Turns out the 2.5% may be rolling capital investment that you can't withdraw unless you decide to stop being a member. Which... is fair, I suppose. Not sure about their time deposit rates, but will be attending a seminar and an interview for more details later.


They have enough physical assets that I'm less afraid of the manager just yoinking the money and faffing off to Indonesia with millions or something. So all that interest income comes from loans and shares. They even have a yearly dividend.


Not really sure how this differs from owning stock, but hey. I'm financially illiterate and now trying to educate myself all the different options. Smile

Last update on February 12, 9:28 am by Carlo Marco.
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