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The Rules of Wealth, 3rd Edition by Richard Templar

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RULE 98

Don’t lend, take equities

If you are asked for a loan by somebody for a specific project such as starting a company or expanding one, there are a variety of answers including:

  • no
  • yes
  • yes but
  • yes on the condition that
  • yes with equity
  • yes with a convertible loan.

Obviously ‘no’ can cause offence (see Rule 100). ‘Yes’ is a no-no, if you see what I mean. Lending friends and family money isn’t on unless you are prepared to write it off (see Rule 97) and generally people who want big loans aren’t that close or they’d know you better.

This leaves us with the last three – conditions, equity or convertible? There may be others of course.

Conditions: A mug’s game if you ask me. On the condition you repay me when you’ve made your fortune. Hmm. ...

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