There are numerous SL banks where you can deposit your spare cash.- Connie McMahon
Now that you have some pocket change and are well along in your search to land that high paying job its time to consider the options at your disposal for making the best use of those hard earned Linden$. In this fourth (and final) installment of this series we will look into some lesser known aspects of the financial world that exists here in SL.
Let’s admit right now that this article isn’t for everyone. If your interest in SL is to explore some fun places, makes some friends and do some chatting and you are happy just buying the Linden$ you need to do that then you need not concern yourself with investing. But before you go, let me offer you one last bit of advice. Regardless of whether or not you have an interest in investing your money, you certainly do not wish to lose it. Sadly, SL has its fair share of cons, scammers and outright thieves.
Theft is rare but it happens. If it does, report it. Normally Linden Lab will take appropriate action to restore your funds and deal with the ‘purp. Scams and cons are another matter. Whether it’s a “double your money” sure thing or a “gift” item, you can’t be scammed without your cooperation. The old rule “If it seems too good to be true, it probably is” applies perfectly well in SL. Beware of avatars bearing gifts.
So for those of you still here, let’s dissect this investment thing in terms simple enough that even I can understand them. If you have enough money on hand that you can consider investing some of it then you have four basic options. You can deposit your money into a SL bank. You can invest in the SL stock of SL companies. You can purchase and develop land. Or you can lend or invest directly through “private placement”. Each has its advantages and disadvantages. And each has its unique risks. Let’s take a closer look at each option.
SL banks are similar to the everyday RL variety. They take in deposits, make loans and offer various banking services. If you deposit your money with a bank, they will pay you interest for the time you leave it with them. Rates vary but 1%-2% a week is typical. Normally these are ‘demand deposits”, meaning you can take your money out any time you like, often through conveniently located ATM units. You may be able to negotiate a higher rate in exchange for agreeing to leave your money on deposit for a certain period of time. Ask the bank.
Banks are a good place to leave funds that you have no immediate need for but may find you need to access in the short term. Unlike RL banks, SL banks do not insure your deposits against loss. If the bank fails or the owners vanish your money could go with them. Remember SL banks are trying to run an honest and profitable business, so they should be able to offer some assurances against losses. There has been only one case of a large SL bank failure, and most depositors were able to recover their money in that case.
A riskier option offering potentially much larger returns would be to invest in the stocks of SL companies. These tend to be land development companies that need cash to purchase and build up lands that can then be rented or sold. But there are other businesses you can consider. The simplest way to buy stock is on a SL stock exchange. You can locate an exchange using Search.
Land is a time honored investment that tends to hold its value, but presents its own challenges and risks. There is a good explanation of land ownership in the SL knowledgebase, and anyone seriously considering a purchase should be familiar with it.
As always, Search is your starting point to locate parcels in which you may be interested. Before you buy be sure you know your purpose for the land, and take great care to ensure that the parcel meets your needs. You can only alter the features of the land to a limited degree, so if you want to build an airport don’t buy a mountain. Once you find a parcel you have to buy it. Prices are set, for the most part, between buyer and seller and as a rule land is not cheap. Especially for us new folk.
Once you have your land there will be other expenses associated with ownership. You will owe taxes every month to Linden Lab (your first 512 sq.m parcel is tax exempt). And you will want to develop and build. This can be expensive. Land purchases are one thing you may just want to go ahead and purchase the Lindens for. But you can get a mortgage from a bank. And saving, while requiring more time, is a surefire way to raise cash.
A final use for your investable funds is a “private placement”. This involves making a loan or investing money directly, with no bank or stock transaction involved. This offers the potential for superior returns, but is also the most risky option. You should avoid this until you have accumulated some knowledge and experience. Even then you should restrict private placement activity to funds you can afford to lose. Barring deliberate fraud, there is no real recourse should your investment go bad.
That brings us to the end of our mutual journey through newbieness. If you have made it this far with me you can hang up your newbie mantle now and join me for a drink at the SL Millionaire’s Club. Okay. Future Millionaire’s Club.
Now that you have some pocket change and are well along in your search to land that high paying job its time to consider the options at your disposal for making the best use of those hard earned Linden$. In this fourth (and final) installment of this series we will look into some lesser known aspects of the financial world that exists here in SL.
Let’s admit right now that this article isn’t for everyone. If your interest in SL is to explore some fun places, makes some friends and do some chatting and you are happy just buying the Linden$ you need to do that then you need not concern yourself with investing. But before you go, let me offer you one last bit of advice. Regardless of whether or not you have an interest in investing your money, you certainly do not wish to lose it. Sadly, SL has its fair share of cons, scammers and outright thieves.
Theft is rare but it happens. If it does, report it. Normally Linden Lab will take appropriate action to restore your funds and deal with the ‘purp. Scams and cons are another matter. Whether it’s a “double your money” sure thing or a “gift” item, you can’t be scammed without your cooperation. The old rule “If it seems too good to be true, it probably is” applies perfectly well in SL. Beware of avatars bearing gifts.
So for those of you still here, let’s dissect this investment thing in terms simple enough that even I can understand them. If you have enough money on hand that you can consider investing some of it then you have four basic options. You can deposit your money into a SL bank. You can invest in the SL stock of SL companies. You can purchase and develop land. Or you can lend or invest directly through “private placement”. Each has its advantages and disadvantages. And each has its unique risks. Let’s take a closer look at each option.
SL banks are similar to the everyday RL variety. They take in deposits, make loans and offer various banking services. If you deposit your money with a bank, they will pay you interest for the time you leave it with them. Rates vary but 1%-2% a week is typical. Normally these are ‘demand deposits”, meaning you can take your money out any time you like, often through conveniently located ATM units. You may be able to negotiate a higher rate in exchange for agreeing to leave your money on deposit for a certain period of time. Ask the bank.
Banks are a good place to leave funds that you have no immediate need for but may find you need to access in the short term. Unlike RL banks, SL banks do not insure your deposits against loss. If the bank fails or the owners vanish your money could go with them. Remember SL banks are trying to run an honest and profitable business, so they should be able to offer some assurances against losses. There has been only one case of a large SL bank failure, and most depositors were able to recover their money in that case.
A riskier option offering potentially much larger returns would be to invest in the stocks of SL companies. These tend to be land development companies that need cash to purchase and build up lands that can then be rented or sold. But there are other businesses you can consider. The simplest way to buy stock is on a SL stock exchange. You can locate an exchange using Search.
Land is a time honored investment that tends to hold its value, but presents its own challenges and risks. There is a good explanation of land ownership in the SL knowledgebase, and anyone seriously considering a purchase should be familiar with it.
As always, Search is your starting point to locate parcels in which you may be interested. Before you buy be sure you know your purpose for the land, and take great care to ensure that the parcel meets your needs. You can only alter the features of the land to a limited degree, so if you want to build an airport don’t buy a mountain. Once you find a parcel you have to buy it. Prices are set, for the most part, between buyer and seller and as a rule land is not cheap. Especially for us new folk.
Once you have your land there will be other expenses associated with ownership. You will owe taxes every month to Linden Lab (your first 512 sq.m parcel is tax exempt). And you will want to develop and build. This can be expensive. Land purchases are one thing you may just want to go ahead and purchase the Lindens for. But you can get a mortgage from a bank. And saving, while requiring more time, is a surefire way to raise cash.
A final use for your investable funds is a “private placement”. This involves making a loan or investing money directly, with no bank or stock transaction involved. This offers the potential for superior returns, but is also the most risky option. You should avoid this until you have accumulated some knowledge and experience. Even then you should restrict private placement activity to funds you can afford to lose. Barring deliberate fraud, there is no real recourse should your investment go bad.
That brings us to the end of our mutual journey through newbieness. If you have made it this far with me you can hang up your newbie mantle now and join me for a drink at the SL Millionaire’s Club. Okay. Future Millionaire’s Club.
