Why is it not good to borrow to buy shares

Loans and credits are becoming an integral part of our lives and can affect them to some extent.

In addition to financing current consumption from loans, the question arises as to whether it is appropriate to start trading in foreign money.

Let’s start with one golden rule. If you want to take out a loan for any purpose, you must always keep in mind that once you have borrowed money, you will sometimes have to repay it again. This applies to loans for a new washing machine or refrigerator, as well as for purchases of securities.

What options does an investor have when he doesn’t have enough money together but wants to trade? He can obtain the necessary capital in several ways, which we will briefly introduce to you.

Leverage shops

Probably the most common stock exchange loan is the so-called leverage trade. The investor prepares a predetermined amount of money. With the help of leverage, he can earn far more on his small amount invested than if he put all his money into the trade.

For example, an investor invests a tenth of the money needed through leverage. If he succeeds in the business, he realizes a profit (but also a loss) of several tens of percent in the order of days to weeks. This is based on the movement of prices of traded securities in the order of percentage units.

Loan for anything

Another way to get capital is to arrange a non-purpose loan. This will give the investor money for all their investments. However, he must reckon with a higher interest rate and also with the fact that he will have to return the money.

American mortgage

If the money from a regular non-purpose loan is not enough for you, you can borrow money through an American mortgage. The condition is that you own a property for which you will arrange it. The interest rate on this loan product is slightly higher than on a classic mortgage loan, but it is also cheaper than a non-purpose loan. The risk of an American mortgage is even greater, because in the event of failure, you can lose your roof over your head or another property.

If you want to invest with much power, do so in the long run and in smaller volumes. You will not get the desired result of getting rich quick, but you risk only a part of your money. If you would like to trade on debt, borrow several tens of thousands of crowns on a consumer loan before arranging an American mortgage. Leverage trading is not recommended for novice investors.

Everything has its time and there is no need to rush anything. Rather, get quality professional literature for your money or pay for an investment seminar.