loan for stock market

Market gives equal opportunity to everyone is true ! It is highly recommended to invest only the left out money you have after savings. It is very wrong that people take loan and invest in stock market, thereby losing hard earned capital.

Drawbacks of investing loan money in stock market

Firstly never forget that the nature of market is unsteady and not 100% predictable. Whether your stocks are giving good return or not, you will still need to pay your monthly EMI’s. This can ultimately turn our to be a blunder.

Besides market can also give you good returns, If you happen to choose a stock with good fundamental and good balance sheet.

Generally we wait very longer for as many as 10-15-20 years to earn a multi-bragger returns like 10x, 20x, 50x or even 100x. But this is not that easy to take loan and invest in stock market because it is includes extreme risk.

In short If the capital is less then It is suggested to go for Positional type of trading. Over there, investment can be done gradually with less quantity of stocks for long term. Power of compounding and long term wealth creation only demands more time.

Power of compounding

As an example, let us take Mr. Singhania the owner of software company and Shubham his servant. Both of them invested in equity stock market. Mr. Singhania invested 25,000/month and Shubham made 2500 investment/month as per his left out savings. It was good enough that he did not took loan to invest in stock market. Singhania earns return of 15% cagr after 10 years and so he withdraws his 66lakh as maturity. Shubham continues to invest till 30 years and his value reached 1.41cr, like whole invested money refunded via Dividend.

Shubham kept patience, did not borrowed money to invest and finally became wealthy.

My story

I started investing in 2010 with very less amount. Even today, the style is same, the only thing that is changed is the amount that I add more to fundamental stocks. I feel happy that I never lost money.

To conclude, I’ll say that it’s difficult to make Rs 1,00,000 from Rs 1000. But it is easy to make 2,00,000 from 1,00,000 and more easy to make 10,00,000 from 5,00,000. Difficulty is only the staring because that is the stage where you need to develop discipline and personal rules.

To conclude, It is always recommended to learn first and then invest.

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