| Getting loan and investing - smart or stupid? |
|
|
|
|
|
Day Trader
Full Member
Cash: $ 13.45
Posts: 58
Joined: 05 Jul 2005
|
| Getting loan and investing - smart or stupid? |
 |
|
What do you think about getting a loan from the bank in order to invest in a GROWTH related Mutual Fund with potentially above average returns?
|
Thu Sep 01, 2005 3:24 am |
|
|
grantchen
Member
Cash: $ 2.20
Posts: 10
Joined: 26 Aug 2005
Location: usa
|
|
|
|
Aggressive investment and risk are always bound together. If your expect that the return on your investment is much bigger than the interest you have to pay for the loan, then it is probably a good choice. Otherwise, it is not worth taking the risk of losing your money. In the last couple of years, investing in reas estate is more profitable and less risky than other investment vehicles. Right now it might not be a good time to tap into the market, but bidding on foreclosure properties might get you a pretty good deal.
Last month someone bought a two-family property in downtown of Albany, NY on a court auction. Guess how much did it cost? Around $ 65,000! He then can rent the property for at least 1000/month, which is enough to cover the loan cost less than $400, which includes the mortgage payment of $330(loan amount 55000, 30 years fixed, interest rate of 6%), tax and insurance, and still makes money. Not to mention the huge appreciation potential of this property in the capital city of NY.
|
|
Thu Sep 01, 2005 3:33 pm |
|
|
ushomeloans
Full Member
Cash: $ 10.55
Posts: 57
Joined: 08 Sep 2005
Location: Sacramento
|
I always thought, wouldnt the taxes for capitol gains counter act any earnings? I wouldn't do it unless you are fine with filing for bankruptcy if everything goes sour
|
|
Thu Sep 08, 2005 11:05 pm |
|
|
AlFromLA
Contributing Member
Cash: $ 7.70
Posts: 37
Joined: 01 Mar 2010
Location: Los Angeles
|
i think its smart unless you are certain or good ROI (like you have some sort of inside info) or else I am not sure if it is so smart. Unless the loan is very low interest rate.
|
|
Tue Mar 09, 2010 12:45 am |
|
|
thad99
New Member
Cash: $ 1.00
Posts: 5
Joined: 14 May 2010
Location: Indiana
|
I am not a fan of taking out a loan just to invest it is something. It can be very risky and dangerous, because you can lose your money. You also need to be able to make the monthly payments on your loan even if you do not make any money on your investment. If you are able to make the monthly payments, then i would just put that toward your investment each month. You also have to remember that with a loan you have interest and that mean part of your profit will be going to pay for that, and not in your pocket.
|
|
Fri May 14, 2010 12:49 am |
|
|
calbeach
Full Member
Cash: $ 16.20
Posts: 80
Joined: 12 May 2010
Location: USA
|
I agree. Making a loan for investment is very risky. However, we need to take the risk in order to prosper. Man did not reach the moon if fear was considered. 
|
|
Wed May 19, 2010 8:54 am |
|
|
david1987
Full Member
Cash: $ 14.00
Posts: 70
Joined: 19 Dec 2009
|
Definitely, its a human nature.
but a person who want to go ahead in their life take some risky decisions.
& many time I see that they are successful in life.
|
|
Fri May 21, 2010 10:00 am |
|
|
jason_simpson
Preferred Member
Cash: $ 28.45
Posts: 142
Joined: 20 Apr 2010
Location: London
|
Borrowing to invest can magnify losses as well as gains.
It is also important that the investor be aware of the terms of a loan secured by investment funds. The lender may require that the loan be repaid at any time. If the borrower does not have cash available, the borrower must sell investment funds, possibly at a loss to provide money to reduce the loan.
|
|
Fri May 21, 2010 4:34 pm |
|
|
crates
First Time Poster
Cash: $ 0.20
Posts: 1
Joined: 30 May 2011
Location: Canada
|
| Re: Getting loan and investing - smart or stupid? |
|
|
quote:
Originally posted by Day Trader
What do you think about getting a loan from the bank in order to invest in a GROWTH related Mutual Fund with potentially above average returns?
It's a horrible idea. Unless you're an advanced level investor, leveraging to invest rarely pays off. Mutual funds rarely show highly above average growth in particular. It's just asking for trouble.
If you know more about getting discount real estate or how to invest the money yourself, it would make more sense.
|
|
Mon May 30, 2011 4:15 pm |
|
|
oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
|
quote:
Originally posted by Day Trader
What do you think about getting a loan from the bank in order to invest in a GROWTH related Mutual Fund with potentially above average returns?
It would be fun to know how Day Trader has done since 2005.
I don't consider it to be a 'horrible' idea, I have been doing it for over 35 years - borrowing against my rental houses and investing in stocks. In my own case it has been a very successful concept. But you need to do the math, do a risk evaluation, plan your risk mitigation techniques.
|
|
Mon May 30, 2011 5:12 pm |
|
|
littleroc02us
Moderator
Cash: $ 384.35
Posts: 1891
Joined: 09 Feb 2009
|
Bad idea! Very risky! If you can't afford to put your own money into investments like Mutual funds, borrowing can only be a risky manuver. You have to figure in risk as a calculation because if things go bad how will you make the loan payment? Always think of the worse case scenario when borrowing money. When you pay in cash there isn't any risk, but when you borrow it's hard to sleep at night.
Risk comes from not knowing what you're doing. (Warren Buffet)
|
|
Tue May 31, 2011 2:46 pm |
|
|
jennypaul
Contributing Member
Cash: $ 6.60
Posts: 33
Joined: 12 Apr 2011
|
I also agr4ee with you littleroc02us. this may be a bad and risky idea. If someone is borrowing money for investing that money in any risky place. He may face any big financial problem in this situation.
|
|
Wed Jun 01, 2011 12:53 pm |
|
|
johntikolo
New Member
Cash: $ 0.60
Posts: 3
Joined: 03 Jun 2011
|
Making a loan for investment is very good and smart thought. I think many payday companies gives you loans for your business and investment also.
|
|
Fri Jun 03, 2011 6:00 am |
|
|
soybean
Full Member
Cash: $ 14.65
Posts: 83
Joined: 29 Jun 2011
Location: Ohio
|
quote:
Originally posted by johntikolo
Making a loan for investment is very good and smart thought. I think many payday companies gives you loans for your business and investment also.
Uh huh, and at what interest rate? 
|
|
Thu Jun 30, 2011 12:29 am |
|
|
|
