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 New 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.
     

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