What are your thoughts on borrowing money to invest?

Discussion in 'Investing' started by MrMike, Feb 9, 2021.

  1. TomB16

    TomB16 Well-Known Member

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    Incorrect.

    All possible outcomes were covered, from my perspective.

    You will have to read my first post, if you wish my thoughts. I'm not typing it again.

    There is a large contingent of people who ignore all input, except that which supports their ideas. Are you in this group?

    I have stated many times, objectivity is important to success in business (which long term investing is).
     
  2. MrMike

    MrMike Member

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    Not to be difficult but this post says nothing to further the conversation. It seems like you're irritated I didn't read a previous post of yours and what is the point of that?

    How about a cut and paste? Or that's what quotes are for. I would love to have a conversation but you don't really seem open to it. You're response is only a reply but says nothing to further the conversation. My question was "How about: When someone borrows money and gets rich slowly? " and you have provided nothing but attitude. I hope your next post is constructive.

    Let's be nice and discuss :)
     
  3. Bridget Mallory

    Bridget Mallory Active Member

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    I don't borrow money because I don't want to pay interest.
     
  4. MrMike

    MrMike Member

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    Is that the ONLY reason? I borrow at 2.75% interest and I'm making a return of 10% in the market. The difference, and my profit, is 7.25% - the interest is a small price to pay to make more money.

    What are your thoughts on that?
     
  5. Stockman2015

    Stockman2015 New Member

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    I don't really like the idea of borrowing money of other people in order to invest them for your own personal use.

    I can't stomach how bad things can turn out if the money I borrowed got rekt in the stock market.
     
  6. Stocksam

    Stocksam New Member

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    The only time it makes sense to borrow money for an investment is when the return on investment of the loan is high and the risk level of the investment is low.
     
  7. MrMike

    MrMike Member

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    Pro tip: don't invest in companies that can get rekt :) What I did was start small with blue chip companies; I started with Enbridge, Bell, Telus, Bank of Nova Scotia, and Bank of Montreal. Wait around 4-6 months for the dividends to accumulate (this increase your equity and give you confidence), then invest more in other blue chip companies; my 2nd round went to more Enbridge, ZWC & ZWK (not companies but BMO ETFs, both covered calls for higher yield) and RioCan. Again, wait 4-6 months for dividends to accumulate raising equity. My 3rd wave went into TD and Royal Bank while my dividends have been reinvested in a TD ETF, TGED and H&R RIET.

    All those stocks I picked are nice blue-chip companies (or a fund from a blue-chip company) and combined, I'm collecting an average yield of 6.5% while paying 3% interest.

    Overall:
    1) I'm not investing in anything crazy so the risk (and more importantly, the stress) is low
    2) while I am only getting 3.5% yield on cost, that adds up over time. Plus the growth; in total my avg rate of return is 11% but that has more to do with the recovery from the pandemic - I don't expect that stay like that.

    Exactly. Others have said I'm not getting enough return or I don't have growth stocks and they're right.... but I am mostly using borrowed money so I'm limited in what I can do safely. The return may not be as good as other people but if you compared where I was pre-loan vs where I am now, investing with borrowed money has been amazing for me! Slow and steady.

    And to the growth stocks point, now that I have a good base in blue-chip stocks, I can reinvest the dividends into more growth ETFs like XUU, VGRO or XGRO. Each month that goes by makes this adventure more safe.
     
  8. renegadelook

    renegadelook Member

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    The risk isn't worth the relatively low amount you'll earn over the interest costs of the loan in the vast majority of cases. This means most people should avoid taking out a personal loan to invest.
     
  9. MrMike

    MrMike Member

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    I think that's my point! Blue-chip stocks are extremely low risk. So you can either make a little money or nothing. I'm OK making a little money safely.
     
  10. sashatrew

    sashatrew New Member

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    It is better to save money and invest your own
     
  11. MrMike

    MrMike Member

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    I'm sure everyone would agree with you - people, business; It is "better" to spend money you have.

    However, that doesn't mean borrowing money is bad and will always, even mostly, end bad. One is better - sure - but the other just has added risk and like most things in life, can work out great (millions of people borrow to buy a house, start up a business) or at the far end of the spectrum, it can ruin you (gambling).
     
  12. Brackwom

    Brackwom New Member

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    The borrowing money can’t work for me, once I borrow the money from my friend & invest it, I said that in return I gave half winning amount also but I lose & gave back his money some interest.


     
  13. Onepoint272

    Onepoint272 2019 Stockaholics Contest Winner

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    ^--- Robot?

    So, all in all, an interest piquing thread and it gets me thinking, yeah, yeah, money is so cheap now, it makes perfect sense, borrow against the house and invest in stocks. Then it hits me. We're all F#%$*d. This market is going to implode into a black hole when all this leverage unwinds.

     
    #73 Onepoint272, Aug 5, 2021
    Last edited: Aug 5, 2021
  14. sashatrew

    sashatrew New Member

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    I have always believed that borrowing money is a very bad idea, which should only be returned to as a LAST RESORT. I used to borrow a lot of money, and when I realized how deep I got into debt, I realized that it was very bad to take debts. I gave all my money to those to whom I owed and did not take any more. But I think that this is a good lesson, because he taught me from my own experience that borrowing is bad and it will not end well. Now I do not borrow and do not lend, I have such principles that help to save and increase my money to this day. I wish you all good luck and never borrow money, even if you think that everything will be fine.
     
    #74 sashatrew, Aug 7, 2021
    Last edited by a moderator: Aug 25, 2021
  15. MrMike

    MrMike Member

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    What did you purchase with the money you borrowed? How much? If you don't mind me asking of course.
     
  16. Heena khan

    Heena khan Member

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    I think you must invest with your own money as you would be facing what comes your way, whether you make a profit or loss.
     
  17. chloerampl

    chloerampl New Member

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    previously, I did not understand how to use stocks at all, but now I have learned and understand how easy it is to trade
     
  18. TomB16

    TomB16 Well-Known Member

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    Stocks are very easy to trade. :thumbsup:

    Many people find it extremely difficult to not trade them.
     
    T0rm3nted and Onepoint272 like this.
  19. Onepoint272

    Onepoint272 2019 Stockaholics Contest Winner

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    LOL. That's a good one, a keeper.
     
  20. MrMike

    MrMike Member

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    It's officially been 1 year since I used my HELOC to invest. The growth is unique to the covid crash but I really believe that under normal circumstances, I'd get the same growth but maybe over 4 years instead of 1 year. BUT the dividends I receive are NOT COVID related.... well, the cuts were :p That's why I love dividend investing; the monthly (or quarterly) dividends you receive keep you happy and calm regardless of the day to day market volatility.

     
    Onepoint272 likes this.

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