Taking A Loan To Invest In Stocks, Should You Do It Or Not?

When is it a good idea to take out a personal loan to invest?
In some scenarios, it may be worth using your personal loan for investing. This could be the case if:

You’re investing in career advancement. In some professions, earning a promotion or getting a more lucrative job offer might require a special certification or professional license. Borrowing a loan as an investment in your career might make sense if it increases your chances of earning a competitive income. Check the U.S. Bureau of Labor Statistics’ Occupational Outlook Handbook to learn more about job growth projections and median salaries in your field.
You’re increasing your income. Many people boost their monthly income by turning their hobbies and passion projects into side hustles or small businesses. If you’re looking to launch your own side venture, a personal loan could offer the funding you need to get started.
You have excellent credit. Your credit score is one of the biggest factors that influences how much borrowing a personal loan will cost you. If you have an excellent credit score — for example, a FICO score of 800-plus — you have a better chance of qualifying for a lender’s lowest interest rate, and you might not lose as much of your investment.
You can afford the monthly payment. Consider whether you feel financially comfortable making the loan’s monthly payment, regardless of how your investment performs. Make sure to factor in any existing debt you’re repaying now and other goals you’re saving toward (e.g., saving up for a home). If you still feel confident about your ability to repay the loan, this might be an option for you.
When is it a bad idea to take out a personal loan to invest?
You should carefully consider not just the pros but also the cons of using a personal loan for something like investing. Here are some scenarios where doing so might be the wrong move:

The investment is considered risky. When an investment has a higher-than-average chance of underperforming or offers above-average returns in a short period, it’s considered a high-risk investment. Investing in the stock market, for example, is considered very risky. Adding debt to your investment portfolio makes your investment strategy more volatile overall.
You can’t afford to have the investment fail. If you need the investment to deliver on its suggested returns to afford your personal loan, this route is a bad idea. No investment can offer a 100 percent guarantee on returns, but one thing is guaranteed: You’ll need to start repaying your personal loan immediately.
You have to pay high fees. Before you commit to a personal loan, be sure you know all of the associated costs. Origination fees can be as much as 8 percent of your loan amount, and the lender may charge you for paying your loan off early.
You’re at or nearing retirement age. As you approach the end of your working years, you should aim to reduce your expenses. Adding debt just as your income decreases could put your retirement savings at risk.

[brianlexl]

I’m living in a cardboard box bc Dave Ramsey told me to buy only what I can afford in cash

[MufasaJungle]

0:20, stopped the video, called the bank, let's ride

[whatsgoodearth]

i have a student line of credit of 25k available a year cumulative to 100k over 4 years if unused. its a 7, 45 % interest per year and only 50 % of growth is taxed. Should i do it

[WwarpfirewW]

Thanks for the video, still relevant now. Ive been investing almost a year, made 30% profit in sum. The thing about loan invest is to push my capital way faster as any job could offer me but im still just speculating about it. With 1400USD a month, which in todays situation is around 400USD or less for savings, leaves me with very little grow on market. While I can repay over the years with my job, Im also left with 36 400USD, thats maximum I can borrow. If it goes well and I can make 30% profit next years until repaid, or even repay it back sooner for free, then Im totally in different world vs. sallary. Interest is high tho, around 6, 9 to 10%.

And yes, big risk - big money, I was lucky starting in rise of nVidia, sadly only little money and zero experience so I missed that 200% stock rise... Anyway appriciate your take, surely would think about that.

[slimeplayz]

So would've done this back in December of 22 when nivida was 179 a share

[manunes]

Well I would pay 7% on my total debt, so actually after only one year I would for example pay 7% from 80.000 usd debt because I paid back 20.000 usd . And my portfolio could have went to 110.000 usd . After the next year I could paid back to 65.000 usd and pay only 7% on that but I get potential Depot rising of 110.000 and so on .

[zinariyasidner]

I like that you have a different pov which I agree with btw. Which is that it is okay to borrow to invest. However you are wrong when you say that you lose money on the long run by investing in the S&P 500 with borrowed money. Even if the average market goes up by 7% a year accounting for inflation. It is every year. So say I borrowed $50, 000 at 7% for 10y. I would have a payment of $580.54 a total of 120 payments or months. If I took that same amount and invested in the S&P 500 for 10 years with an average return of 7% annually I will be left with $98, 357.57 so while payed close to $20k in interest over the ten years. I made close to $50k so really you made $30k on borrowed money. This is not taking into factor the fact that you will contribute to your portfolio in addition to the borrowed money which will grow it even more exponentially. Please let me know if my calculations are wrong and sry 4 the long comment. 🙂

[josephchaar]

1. I don’t know about the US but here in Canada it’s perfectly legal to invest your student loans. 2. Why would you just assume a student would make a riskier investment with his student loans? 3. Yes it’s true you can’t declare bankruptcy to get out of your student loans. However, if you’re declaring bankruptcy and your house is getting repossessed and you can’t get a loan for significant period of time your situation is also pretty bad.

[mc]

In reagrds to investing with a credit card and the 0% interest period. Couldn't you pay of what you can untill that period ends then just get another credit card at the end of the term with a 0% transfer balance and with an extended timeframe?

[mailkamal]

How should one go with 11.15% interest to invest wisely according to you.
Thank you for sharing your knowledge.

[Cashhhhhhhhhhhhhh]

Well if you loan a grand and pay it off over 60 months all you need is £23 a month to pay it off

[Cashhhhhhhhhhhhhh]

My best option is loaning 1k pay 23 a month back over 60 months (which is 1.4k) i can easily get 23 a month of traiding plus profits i make with safe risk managements if you plan and do the right thing its smart, however im only 17 and i dont know much . I guess

[xkrimzonxrsps]

Watching this video because I just borrowed 50k to fill up my tfsa and just bought pltr and sold them as at 40$ strike 2026 gonna use the premium to pay off each month the interest and the rest in amdy let's boysss

[NicholasFerdinand-itlv]

Banks do not give out small unsecured loans anymore and haven’t for a long time. I’m not even sure there are any payday advance lenders anymore. There was one just down the street from me and I noticed the building was empty several months ago.

[williamdemaio]

What about taking out a loan to sell covered puts on futures? If contracts execute then you can sell covered calls? And with futures, it’s safer than individual stocks.

[bakedjesus]

I would say depends on your knowlage risk tolerance and what your investing into but ultimately i would say yes if your a beginner i would say start small invest what you have and learn as you get more confertable start increasing your risk dont take out a massive loan jump into a shark tank covered in blood i started investing and trading with just $20. I would add ignore the people that says put your money here for 1000x do your own research invest and trade what you know and have faith in dont drop your bank on something because someone tells you its gonna 1000x they dont know no one knows what the markets gonna do its all an educated guess many uneducated guesses and thats where people lose

[andyk]

Tax breaks are a big part of the story that is missing

[harshamin]

Should have done some research on Dave Ramsey. He buys his real estate ALL IN CASH. He doesn’t have real estate debt.

[Cashhhhhhhhhhhhhh]

Most of these people are already wealthy and know they can pay the money back because of the passive income they make from bussiness ect very dumb idea to take a big loan as a risk to make money if you have no ground levels to stand on

[Cashhhhhhhhhhhhhh]

Craziest stuff ive heard not wise to take 35k out ur morgage and just blindley slap it into s and p 500 hoping it goes up in the next couple of years