Borrowing to invest in stocks

yinka ogunlami

October 17, 2016 12:39 PM

I heard of someone who decided to invest in the stock market by borrowing money from a bank to fund the share purchase.

Borrowing to invest in stocks

In a

Well, my head spun, to say the least because that is a very risky thing to do. Many investors (I know at least) including myself, will not go down that road because:

In my opinion, prior to accepting a loan agreement and signing the dotted lines:

If all your answers are not yes and based on all your outgoings, you don’t have money to cover the bank charges, please don’t go for the loan. Instead try to save some funds so that at another time, you can buy it or another one. The stock market is there and will not disappear anytime soon - I believe.

Lastly, yes we know that banks worth their salt know their customers, so they will probe them as to why they are borrowing the money and how they plan to repay, however, the onus is on you to ensure that you are telling yourself the truth about your “financial health”.

Finally, remember to only invest money that you are willing to lose in the stock market (especially if you are going for growth stocks).

Keep investing,

Your Investment Analyst

yinka ogunlami