You know that stocks have returned an average of 17 to 18%. So you borrow some money at 9% interest and invest that amount in stocks. Until you realize the profit, you’ll pay interest or EMI from your pocket.Anyway you look at it, it’s going to be profitable. How about that? If you are planning to do something like that – you’re at the right time reading this article. Calculations on paper may show that it is practical. But in real life, such strategies are extremely risky. We advice not to leverage (that’s the financial term for using borrowed funds) your investments in any form. It’ not a good idea at all. There are three perils waiting for you when you leverage –
- It multiplies your risk.
- Even when the value of your holdings go down, you have to pay your loan installments. The effective cost you pay is very high.
- There will not be any peace of mind. Guaranteed!
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