Can I Take Loan and Invest In Stock Market?, the answer to this is Yes but there are certain things that you should think about and prepare before taking a loan and investing in the stock market. This article will provide you with all possible details on “Can I Take Loan and Invest In Stock Market?” which helps you to prepare the plan.
Stock Market is a good platform for those who looking best place to invest money for a good return. However, buying the best stocks that mostly fall under large capital requires a significant amount as their prices are very high which does not possible to buy stock for some people who have limited income sources and salary. So the question may arise for those, Can I Take Loan and Invest In Stock Market?
However, it is against the investing rule that you should not invest borrowed money and invest only your own money that does not affect much to your finances even if it loss. Some people may have some knowledge about the stock market but don’t have much capital to invest or some people may have already lost some money, gained good knowledge from it but now don’t have much capital to invest in the stock market to recover the losses.
Why Need Loan To Invest In the Stock Market?
As we all know there is no minimum amount required to invest in the stock market and if you have a dedicated earning source like your salary, then you could try to invest some amount of your salary in the stock market.
With some amount of salary, you may not buy large stock quantities from large capital stocks but you can buy stocks from low capital or mid capital. There are opportunities available in the stock market that you can trade with some amount of your salary like you can do Intraday, you can trade options by buying Call options or put options according to your study and prediction. This way you can see your self whether you are making an average return.
If you are making a good average return by investing some amount of your salary, then you can use that return in your next trade, this way you can buy more quantities in your next trades and your fund will also get increased. If still, you feel you need to take a loan and invest in the stock market to earn big and fast, please see the next important points.
Which Type Of Loan Take and Invest In Stock Market?
Never go for a mortgage or gold loan, also never take money from Lenders to invest in the stock market, you never know what will happen with your trades hence your house or gold will be at risk and you will be in a panic situation, such a situation is dangerous to your health too.
The best option is to take a personal loan, in this, you do not need to give any collateral. Also, if you are making a good average return, you can use the same to pay your personal loan EMI. There are certain things you need to know before taking a personal loan to invest in the stock market.
How Much Loan You Can Take and Invest In Stock Market?
If you have an active source of income like a salary, then initially you should only take that much amount of loan for which you need to pay EMI 25% from your active source of income like a salary. For example, let’s suppose your active source of income gives you Rs. 20,000/- every month, then make sure you take a personal loan for which you only pay EMI Rs. 5,000/- to Rs. 6,000/- from your salary of Rs. 20,000/- and rest of Rs. 15,000/- should be in your pocket for your other use.
If you think you can take a big amount loan and you will manage the EMI, don’t do this, you will never know what emergency will come in your personal life, and if your portfolio is in minus then you will be in trouble, for that you will need some ready amount in your pocket.
10 Things You Need To Keep In Mind Before Loan Take and Invest In Stock Market.
- Never invest a whole amount of loan in the Stock Market.
- Never invest a complete amount of loan in a single stock.
- Never use the complete amount of the loan for Intraday trading, only 20% amount of the loan you should use in Intraday trading.
- Never use the complete amount of the loan for Options trading,
- Never take a loan and invest in Stock Market when someone suggested you buy a particular stock,
- Never take a loan and invest in Stock Market based on tips and tricks.
- Take a loan and invest in Stock Market only when you have an active source of income like a salary.
- Take only that much amount of loan for which you need to pay EMI 25% from your active source of income like a salary.
- If somehow you lose all amount of loan in the stock market, never go for another loan while you are paying for EMI for an active loan.
- Avoid mortgage loans, gold loans, and money from Lenders to invest in the stock market.
Conclusion.
Taking a loan and investing it in the stock market can be a good option when you have a good level of knowledge of the stock market and are able to generate good returns. However, a lack of knowledge of the Stock Market or investing based on other suggestions can lead to serious issues. Take only that much of a loan for which you can fulfill EMI easily from your active source of income.
Frequently Asked Questions about Can I Take Loan and Invest In Stock Market?
Can I Take Loan and Invest In Stock Market?
Yes, you can take personal loan and invest in the stock market only when you have an active source of income like a salary, and EMI for that personal loan should be within 25% of your active source of income like a salary. Make sure you have knowledge of the stock market and you can able to get a good return from investing.
Which Type of Loan can take and Invest In Stock Market?
You can take a Personal Loan and avoid mortgage loans, gold loans, and money from Lenders to invest in the stock market.
Can I Take Loan and do Intraday Trading?
You should now use a whole loan amount for Intraday trading. Only 20% of the loan amount you have to use for Intraday Trading.
Can I Take Loan and do Options Trading?
Options are highly volatile, for safe trade you should avoid options trading with a loan amount.
Can I take more than 1 loan and Invest in Stock Market?
As per your capability, you may get more than 1 loan, but make sure you are paying only 25% from your active source of income for EMI.