Borrowing to invest.

Cyberman60

Borrowing to buy a house maybe, but borrowing to invest is crazy IMO. :eek:

brasso

mad_rich wrote: »

Over five years, you say?
...........
Or how about eleven:

I'm not going to advocate doing what the OP is suggesting but it has to be pointed out that you can 'prove' whatever you want with charts. For instance, when you were choosing a 5 year period, you could have gone for that stretch between early 2003 and late 2007 as you show on your 11-year chart. Looks like about 100% gain?

Incidentally, did I miss it or what do the charts represent? The FTSE100? Again, it's a rather arbitrary index. I'd assume that the OP's money would be diversified beyond more than one narrow sector. I would also assume that his investment(s) would earn dividends which are not included in a simple index chart. And being a pension, the OP would presumably be in the market for a lot longer than 5 or 11 years.

That still doesn't make it a great idea of course.

Zippeh

Im 34 at present so Im in for a while longer! I guess the five year graph is just an indication of the value potential of the £11k as Im paying it off. I dont seriously think ill be doing this but it does make for an interesting conversation! I think it was the initial tax relief and investing "early" that made me think about it. Also the fact that i wouldnt be "spending" any more than i pay into my pension per month.

redbuzzard

You'll get the tax relief contributing at £200/month; nice point about being invested earlier but combine the interest expense and the fact that markets are a lot higher than the low of 2008/9 and you might even do better phasing it in.

jimjames

Cyberman60 wrote: »

Borrowing to buy a house maybe, but borrowing to invest is crazy IMO. :eek:

Interesting how it's accepted for BTL but not for investing.

The numbers since 1996 would show very similar results for shares and BTL with same leverage.

Jsscmm

I must admit I had similar thoughts to the op on this. Then I considered how I would recover if I had to, ie cover the lose. I thought I would be able to cover via salary etc, so then I asked myself... Why have the loan (0% credit card transfer I was considering) why not just use normal money instead and simplify things.

jonesMUFCforever

If you state accurately to a lender that you want to borrow to invest - the application will fail regardless of your credit score.
If you try to hide it you will be committing forgery.
By all means invest your own money in any scheme that you desire but if you have to borrow it you can't afford it.

TakeCareOfThePennies_2

Zippeh wrote: »

Borrowing to invest.

You cannot be serious. :eek:

Slap yourself in the face and get a grip man.

Investing is something you only do with spare cash, after savings, and a cash for emergency expenses to keep you going for 6-12 months if the excrement hits the fan have both been taken into account.

Investing is something you only do with spare money you can afford to loose.

Investing IS NEVER something you do with someone else's money. Unless you work in the financial services industry and are an IFA or Stockbroker.

Zippeh

TakeCareOfThePennies wrote: »

You cannot be serious. :eek:

Slap yourself in the face and get a grip man.

Investing is something you only do with spare cash, after savings, and a cash for emergency expenses to keep you going for 6-12 months if the excrement hits the fan have both been taken into account.

Investing is something you only do with spare money you can afford to loose.

Investing IS NEVER something you do with someone else's money. Unless you work in the financial services industry and are an IFA or Stockbroker.

Consider my face duly slapped

guymo

TakeCareOfThePennies wrote: »

Investing is something you only do with spare cash, after savings, and a cash for emergency expenses to keep you going for 6-12 months if the excrement hits the fan have both been taken into account.

Investing is something you only do with spare money you can afford to loose.

Investing IS NEVER something you do with someone else's money. Unless you work in the financial services industry and are an IFA or Stockbroker.

As someone with a mortgage and a pension fund, I disagree.

On the other hand, to answer the OP, I would say it is very unlikely that you would get a reasonable return in exchange for the additional risk you are taking on if you borrow to invest in this way. It's not totally crazy, as some of the calculations in the thread show, but it does ramp up the risk you are taking --- mainly the commitment to pay the loan off every month or face penalties --- and doesn't offer a huge amount in exchange.