SubscribeInvestment Valuation
If we are to develop passive income streams then we have to know a good investment from a bad one. What differentiates good investment from a bad one? The first thing we need to determine is the cost of capital. How much does it cost to borrow or how much of a return is lost by diverting capital to this investment. The return that we seek must exceed the cost of capital. The next thing to consider is how scalable is the investment. If an investment is scalable and the return exceeds the cost of capital then the limiting factor on overall returns is access to capital. If capital is reinvested then growth can be exponential. This is when your interest or profit also earns interest. No Investment is without risk however and the risk factor must also be added to the mix.