Would it be a dumb idea to borrow x amount of money and turn around to put into a high interest invest meant?
March 14, 2009 by How Savings Bonds Work
Filed under High Yield Investing
Can you answer johnathanpartin’s question about Bonds?:
I thought about taking out a loan, which one i do not now, and borrowing x amount of money. Then taking that money and investing it into a account that will yield close to greats amounts. Hopefully at a high investment rate. and takeing some of that money that is earning at high investment rate and putting some of that to pay back the low interest loan.
Making Money Online
I thought about taking out a loan, which one i do not now, and borrowing x amount of money. Then taking that money and investing it into a account that will yield close to greats amounts. Hopefully at a high investment rate. and takeing some of that money that is earning at high investment rate and putting some of that to pay back the low interest loan.
Making Money Online
Bonds Feedback: Investing with borrowed money is inherently risky. Think again.
Bonds Feedback: depends on how much you will REALLY be paing for the loan. And how much you get on the high interest investment, After Taxes
Bonds Feedback: if you need to build good credit and the amount of interest earned compared to interest owed on the loan is a reasonable amount more than yes..otherwise no.
Bonds Feedback: Interest on borrowing is higher than earnable interest about 95% of the time, so you will lose money…
Bonds Feedback: It depends on the loan and the interest rate.
In a loan there are origination fees, annual fee, wage insurance, and such.
The higher yielding investment are risky. Then there are also fees associating with keeping an investment account like trading fee and commission etc. Then there are capital gains taxes if you cash out on the investment or withdraw dividend.
Depending on the loan agreement, a typical loan you have to repay every month. But earnings from an investment is dependant upon you being actively trading and mangaing your account.
The Bank will win most of the time because a loan rate is base on their charts and your credit rating. If the interest is high over 10% you may need to reconsider because the gain from playing the stock market might not be worth it unless you are an experienced and informed trader.
Bonds Feedback: I was thinking of the same and I will do it one day:
borrow $180,000 over 35years, thats about $12,000 per year repayment, $7000 of the $12,000 will be interest paid to bank.
so lets say I invested $180,000 into Citibank Shares (stock symbol C) @ $19 per share and the financial markets recovered slightly, when Citibank gains to $25 per share in a year, sell all your shares to have a bank balance of $236842 minus $180,000 you want to repay back to the bank, leaves you with $56842 minus 12,000 first year repayment, that leaves you with a profit of $44842 not bad!,
However, if citibank recovers to $38 p/s then make sure you invest in teeth whitening for your big smile!
As long as you can afford the repayment it won’t matter if it declines from $19 as eventually it will uptrend to a new high
Bonds Feedback: Interesting idea, but you’ll likely lose money. The reason is that its impossible to find a high interest yield that is guaranteed. Any investing related to the stock market is a risk — its as simple as that. You can make money or lose money — nothing is guaranteed.
It could possibly work depending on how much money you took out for your loan and the interest rate you are earning. ING Direct gives a guaranteed 3.00% on savings accounts, but this likely won’t be enough to make you a profit nor to pay your monthly payments.
Overall, you’ll probably lose money. If you figure out a good strategy, let us all know!