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Consumer Credit & Investments. Opposite sides of the same coin. One side of the coin is…. Credit. The other side is …. Investment. Credit has two general types. Secured credit Like a mortgage or an installment loan. Unsecured credit like a credit card. Secured credit has collateral…. - PowerPoint PPT Presentation
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Consumer Credit & InvestmentsOpposite sides of the same coin
One side of the coin is…..
Credit
The other side is ….
Investment
Credit has two general types
Secured credit Like a mortgage or an
installment loan
Unsecured credit like a credit card
Secured credit has collateral…
Collateral is something of value that can be taken back if the loan is in default—not paid back
Unsecured credit is issued on your good credit rating only
Your credit rating affects how much you can borrow, what your interest rate will be and how long you can borrow the money for.
All based on your credit history of managing your credit in the past– your image in other words
Risk Reward for both Credit & Investment
Credit greater risk = higher interest rates
Investments greater the risk = the higher the potential reward
Money is like water: the flowage rate is related to the temperature
More liquid = easier to spend (turn into) like cash: it really flows fast
Less liquid (or frozen in a long-term investment) more difficult to turn back into cash & spend