Welcome Guest! You are here: Home » Business & Economy

Can You Use Personal Loan to Fund Your Investment?

Vital: The returns (even short-term) on your investment must be able to cover the miscellaneous costs involved in a personal loan

Tuesday June 23, 2020 2:50 PM, ummid.com News Network

Personal Loan for Investment

In the words of Robert G. Allen, “How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” Investment in shares, bonds, fixed deposits, etc. is the blueprint for expansive wealth accumulation; these are ways to make your money work on your behalf.

However, you may lack the immediate funds needed to start as an investor. What do you do then? Start gearing and leveraging! How? By taking an instant personal loan and investing the money in stocks and other financial instruments.

But, is taking out a personal loan the right choice? Let’s find out.

Factors to Consider

• Personal loan interest rates

Before taking the plunge into the stock market, consider the personal loan interest rates. This is because the higher the interest rate, the higher the amount you will have to shelve out towards EMI payments. And to service the interest payable, you will need to make higher returns on your investment. Hence, you must opt for a personal loan with low-interest rates.

• Your knowledge of investing

More often than not, investment in stocks tank because the investor is not well-versed with the stock market and its functioning. Despite being a highly volatile market, predicting patterns and trends is possible for healthy returns. Before you jump into investing by taking a personal loan, conduct thorough research on how the stock market functions, how stocks are performing, and why they are doing so. Once you’re equipped with the right knowledge, a personal loan for investment will generate positive long-term returns.

Questions to Answer Before Taking a Loan for Investment

Before you take a loan for investment, consider the following questions -

1. Does the investment guarantee a positive outcome?

“If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes,” said the famous investor, Warren Buffet. To see positive results in stocks, IPOs, and derivatives, long-term investment is ideal. This makes it all the more important to ensure that your investment will yield good returns. Opt for an instant personal loan when the promise of returns is worth the risk involved.

2. Will the returns cover-up for miscellaneous loan expenses?

This is another vital question to consider before taking a loan for investment. The returns (even short-term) on your investment must be able to cover the miscellaneous costs involved in a personal loan – processing fees, documentation charges, etc. Expecting returns higher than the borrowed principal does not make sense; however, the returns must at least cover the additional costs involved.

3. Will I be able to repay the personal loan if the returns are not as expected?

When all has been said and done, the truth remains that the stock market is highly unpredictable. If the market crashes, it could be possible that you’re left with inadequate funds to pay off your personal loan. Moreover, you could end up making higher returns on your investment, just not during your loan tenure. This mismatch may also make it difficult for you to close your loan. Consider a personal loan investment when your ability to repay the loan is not entirely dependent on the returns.

4. Do you wish to take a personal loan online for investment purposes?

Lenders offer personal loans for self-employed and salaried individuals. Before applying, check your personal loan eligibility, determine your EMI in advance using an online personal loan EMI calculator, and then submit the relevant documents.

For all the latest News, Opinions and Views, download ummid.com App.

Select Language To Read in Urdu, Hindi, Marathi or Arabic.

Share this page

 Post Comments
Note: By posting your comments here you agree to the terms and conditions of www.ummid.com