Get personal loan>buy shares>make money..

C_Mababejive

Money is cheap now. Can anyone see how it can go wrong save for a market crash?

Broken_Biscuits

https://www.bogleheads.org/forum/viewtopic.php?t=5934

Read market timers road to ruin following a similar strategy.

Have a go once you have read this, what's the worst that could happen?

pfpf

loan a monopoly board>buy property>make money.

stay safe and have fun.

C_Mababejive

Heres my example

Borrow £10,000 over 5 years at 3.2%apr TAP £10,822

With the £10k buy for eg VOD current price 224p

Number of shares bought =4464

typical annual div per share = 11.30p

Total divi pa is £504

So for 5 years =£2522

If divi is reinvested then returns will be more..

I am rubbish at maths,,tell me where it could go wrong?

bigadaj

C_Mababejive wrote: »

Heres my example

Borrow £10,000 over 5 years at 3.2%apr TAP £10,822

With the £10k buy for eg VOD current price 224p

Number of shares bought =4464

typical annual div per share = 11.30p

Total divi pa is £504

So for 5 years =£2522

If divi is reinvested then returns will be more..

I am rubbish at maths,,tell me where it could go wrong?

Well you'd presumably have to make loan repayments along the way so,wouldn't be able to invest the full owned amount, which would cut your projected returns.

Dividend cover for many large stocks is currently inadequate, and Vodafone lost money last year. So you're looking at a dividend cut, which may well be accompanied by a drop in the share price.

Would be better going for a fund with a spread of risk, but still no guarantee of profit.

Superscrooge

What could go wrong?



There are plenty of large companies that have got into financial difficulty

C_Mababejive

I already have the money to make the loan repayments so it wouldnt come out of dividend return.

Flobberchops

I entertained similar ideas for a while until I realised consumer loans are amortising (i.e. you pay back the capital along with interest) while the money you're making on an investment is usually interest only.

I tried to work out at what ratio of loan:investment you'd be turning a net monthly profit but the cogs in my brain jammed and I had to take a lie down. Is there a simple equation or rule of thumb out there?

bigadaj

C_Mababejive wrote: »

I already have the money to make the loan repayments so it wouldnt come out of dividend return.

So that will affect your net returns given that you are making repayments from another pot of money that could have been invested or earning interest or being used for some other use elsewhere.

The other risks still stand.

richyg

Broken_Biscuits wrote: »

https://www.bogleheads.org/forum/viewtopic.php?t=5934

Read market timers road to ruin following a similar strategy.

Have a go once you have read this, what's the worst that could happen?

Broken Biscuits - that thread of Market Timers is quite a story and I read it first a few years ago. :T

atush

C_Mababejive wrote: »

Money is cheap now. Can anyone see how it can go wrong save for a market crash?

Get a loan, invest in stocks, lose all the money, still owe the money.