One of the common ways to start investing, when you do not have your own investment funds, is through a bank loan. YOu can get a personal loan from banks and use the money to make an investment in various markets. You are basically doing this because you believe your return on investment will be higher than the money you will be paying to the bank as interest on the loan . What if the rate of return is lower than the interest you are paying against your loan?
Risk of Investing Through a Loan
- Thread starter nomad
- Start date
I never considered borrowing money to make investments. Every investment involves risks. Borrowing money to invest sounds too risky to me. I just invest what I can afford. Even if I make a loss, I do not have to worry about debts.
There are many people who destroyed their life after borrowing loans. They had to sell their assets in order to pay the loan back and also pay interest money. This is why borrowing money and paying interest for that is a really bad idea.
Investments should be with idle money, not money for daily needs, let alone borrowing from banks, even though investing with debt is often done by professional investors, but they do not borrow from banks, they (investors) can take advantage of both downtrend and uptrend moments , especially in high-risk investment instruments.
The investment principles that you describe will be more suitable for me as a layman, but not for expert investors, they can recognize the market is going up or down so they can take profits by borrowing money.
