Many people fail to accurately determine the amount of risks involved in an investment. In many cases there is no appropriate level of projected return to justify an investment. That does not come down to being risk averse, it comes down to the "opportunity" being worthless to anybody with some investment sense.LaudJohn wrote:gavinmac wrote:If you're loaning money to skint expats at an interest rate of 120% per year, you're not a "professional investor." You're Gazzo.
The rate of required return needs to match and compensate for the level of risk.
In this case there is not only repayment risk but operational risk.
Few people price risk appropriately in Cambodia, especially in small businesses such as bars, which is evidenced by the huge number of people who walk away with nothing to show for their investment, let alone their labour.
You, or anyone else for that matter, are however free to do your own risk assessment and offer a much lower level of interest to this borrower with your funds, after all we all perceive and price risks differently.
I know of a few people who recently got taken for a ride (one who you all know very well). I was told about the opportunity, promised levels of returns and a small bit of the communications that had taken place. After that 30 minute conversation I told my friend I would not invest in it myself and I recommend he doesn't proceed as I felt the SCAM alarm bells ringing. Unfortunately the rest of the story doesn't have a happy ending.