Mika
VIP Contributor
The best use of loan money is to use it to buy assets or invest. You can get a business loan to run your business, a house loan to buy and construct a house, a car loan, etc. However, most banks do not have this loan type where you can write “to invest in stock market” or “to invest in mutual funds” as the purpose of the loan. Therefore, you will have to apply for a personal loan and use it to invest.
However, the question is whether it is safe to use your loan money to invest, in other words, do you get a better return from your investment compared to what you pay for the loan repayment? Is it wise to invest in something risky like the stock market through a bank loan? Stocks do not start giving returns immediately. How will you pay your loan installments until the stocks start giving dividends?
You should get a loan for investment only when you are sure that the return is higher.
However, the question is whether it is safe to use your loan money to invest, in other words, do you get a better return from your investment compared to what you pay for the loan repayment? Is it wise to invest in something risky like the stock market through a bank loan? Stocks do not start giving returns immediately. How will you pay your loan installments until the stocks start giving dividends?
You should get a loan for investment only when you are sure that the return is higher.