Tag Archives: #overdraft

Hack

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Farm-land?

Own it?

Yes?

If so, you can avail an overdraft on your fixed deposits, having to pay low interest.

Why?

Government allows farmers to take crop-loans.

If you own farm-land, well, you are a farmer.

Even if you don’t use the facility to buy crops, you can still use it…

… for whatever.

Perk.

Government sops it to farmers and you get roped in as an accidental farmer.

G(ood) f(or) y(ou). Yeah, gfy.

Why overdraft?

So that a fixed deposit doesn’t need to be broken prematurely.

Why the trouble?

Let’s say you need trade money to be in a trade for a few days, but the bulk of your liquidity is working elsewhere. However, in good times, you have created fixed deposits, which add to your liquidity at regular intervals. When your liquidity runs out for a few days, you think of breaking an FD to replenish it, but this incurs a penalty.

Suggested hack keeps everything intact.

You utilize the created liquidity, let’s say for a month.

Meanwhile, your income pipeline generates new income. You use this to keep nullifying parts of the loan. Let’s say in 40 days you have nullified the loan, and your positional trade, for which you took the loan, is still on. You are charged low interest on the loan taken for 40 days. Now the loan is nullified. Position is on and yielding. All equations solved. Net net something created out of …

…s omething that was already utilized elsewhere.

It doesn’t necessarily turn out so good all the time with a position, though.

If it’s losing, you are suffering positional loss and interest payment loss simultaneously. That’s the downside.

This hack is worthy, nevertheless.

Interest charged on 40 days is a small figure, typically less than a percent. A positional trade in profit can well give 15%+ in that period.

So, hack stands.

All you need to do is to see if the hack fits you.

Let it come, then we’ll see…

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Looking around for an opportunity?

Or letting one come?

Does it matter?

Is there a difference?

You bet!

When you’re looking around, you could be in a hurry. You want to get it over and done with.

Big mistake.

You are vulnerable.

Entry price will be expensive.

Your adversary feels your anxiety and jacks up entry level.

Quality? What quality? You’re in a hurry, right?

Don’t be.

Hurry spoils the curry.

Let the investment come to you.

It will.

Brokers are restless. They want to sell. They’ll knock at your doorstep once they know your funds situation. And, believe me, they won’t ask you about your funds situation. They’ll ask your banker. In fact, your banker could well be on retainer. He’ll make sure that high quality info ups his retainer fee. That’s how it works today. Don’t believe me? How come so many people have your cell number? Did you give it to them? No? Information is a commodity. It can be bought for a price.

So, wait.

Block your surplus funds as fixed deposits.

Get an overdraft going for one fixed deposit.

Delve into your normal activities.

Now you’re sitting pretty.

An opportunity comes.

It’s cr*p. Broker’s hoping you’ll bite into the nonsense being sold.

You tell the broker to buzz off. Lack of hurry gives you the clarity required to act like this.

Something lucrative comes along. Price is right. You overdraft on your FD. Yeah, it’s ok to pay the price for quality with margin of safety.

You can always fill in the overdrafted amount as new funds accumulate. The nominal interest paid for ODing is called opportunity fees. It’s chicken-feed. Just forget about it.

The best investments in life are worth waiting for.