Get personal loan>buy shares>make money..

AndyT678

I agree that using a personal loan as seed money for investing is a bad idea.

However, I and many others here still have mortgages whilst continuing to invest. On that basis I'd have to say that actually all of my S&S investments are funded by debt. It's basically what OP said at the start. Borrow cheap, invest long term and reap the rewards. It's just that a 20+ year mortgage term better matches an investing time horizon.

mapk

Get personal loan>buy shares>make money..

or Get personal loan>buy shares>lose money>do not pass Go>Go straight to jail

EdGasket

It can work, on average, but you'd be silly to buy one share. What if you had bought Tesco at 300p or more? You'd have lost half your capital, be getting no dividends now, and still have the loan to repay. Better would be to borrow money and invest in a diversified fund or two and be prepared to stay with the experiment through a market crash.

Malthusian

AndyT678 wrote: »

However, I and many others here still have mortgages whilst continuing to invest. On that basis I'd have to say that actually all of my S&S investments are funded by debt. It's basically what OP said at the start. Borrow cheap, invest long term and reap the rewards. It's just that a 20+ year mortgage term better matches an investing time horizon.

It's not really funded by debt unless you're in negative equity. And with today's economic environment and LTV rates that's a pretty remote possibility. If I have a £200,000 mortgage and I invest £15,000 of spare income in a stocks and shares ISA I haven't really borrowed to invest when the house is worth £250,000.

Even in the worst case scenario where I invest the money so idiotically that I lose every penny of the £15,000, I still have the house, and I'm presumably still paying the mortgage.

However if I'm not investing spare cash but instead borrowed £15,000 to invest, and it doesn't grow by enough to repay the loan and the interest, then I have to find the difference elsewhere. Remortgaging, say. If I have no other assets and can't get credit then it's bankruptcy for me.

As the small print on the spread betting advert says, losses can exceed deposits. That's the difference between investing earned income in S&S when you have a mortgage (secured against an asset greater than the mortgage) and investing borrowed money.

Most of us would not tolerate an investment so risky that there is a material risk of it going from £15,000 to £0, even fewer would tolerate a leveraged investment with a very significant risk indeed of going to a figure less than £0.

C_Mabebejive wrote:

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

If you're rubbish at maths then why do you think that ultra high risk gambling with your finances is a good idea? It's like saying you're planning to run across the M4, then in your second post revealing that you're blind and deaf from birth. It explains why you might be considering such a stupid idea (as you have no concept of how fast a car can move and how hard it can hit) but it also makes it all the more urgent that you don't do it.

Thrugelmir

C_Mababejive wrote: »

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

Why is money cheap?