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How to make money from money

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Rotation of money requires regular inflow and outflow of cash. It depends on the numbers and your calculation of how much risk you can afford to turn a profit.

But how does one make a profit by just rotating money?

Let’s take an example.

I took 10 toffees from you on loan, with a promise to return them after 1 month. Unfortunately, I consumed 4 of those and now I am left with only 6 toffees. To fulfil my promise of returning your 10 toffees, I must find another friend, who can loan me 4 toffees. Assuming I found one, I take 4 toffees from him on loan with the same promise of returning after a month.

I return your 4 toffees (which I took as a fresh loan from a new friend), so my deal with you is successfully closed. However, I still owe 4 toffees to my 2nd friend. As the month-end approaches, I now need to find another friend who can give me 4 toffees on a month loan – or even I can go back to my first friend i.e. you. You also would not mind giving me a loan because I fulfilled my promise earlier. I take 4 toffees from you and return them to the other friend.

This cycle can continue forever, without me returning the 4 toffees that I consumed in the first month.

Imagine that toffee as the payment that you were supposed to give to your lender but by having nice goodwill in the market you can delay his/her payment and then you utilize that money to invest somewhere else for a short period to make a profit out of it.

This is how you make money from money.

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