Should You Borrow Money To Invest | Leverage Stocks
20.2 هزار بار بازدید -
4 سال پیش
-
So I've invested around 40k
So I've invested around 40k in the past 3 months, and one question that I get a lot is Tommy is it a good idea to borrow money to invest in stocks. 🎁ACORN FREE $5🎁 Link: https://acorns.com/invite/38EYSU
1. The how is Simple
- If you want to borrow money, you can either use Margins with Robinhood to borrow and use your portfolio as leverage and pay interest
- Or you can get a personal loan
- Or even take money out your credit card to get it down, or ask a friend.
2. Stock Market ( since right now its half price, because of everything that’s going on)
- I’ve invested a little over 40k total in the past 3 months
- But Some people are wondering since loan rates are so low, should I borrow some money to start investing and flip
- And it sounds solid, you borrow money, invest it, then sell it and pay the loan and keep the difference
Here is the Pro:
- Say for example you find the next Apple, you want to invest in airlines, and cruises or AMC since they have lost so much money in the past 3 months
- So if you borrowed 10k for example and held it for a year and hopefully it recovers
Example:
- Buy AMC for $2.25, Invest 10k and that’s around 4,444 shares
- And if it goes back up to its highest point this year of $7.76 Back in February
- That means you could sell for $34,488 and keep a profit of $24,488 ( after you pay back the loan)
Tip: And that sounds pretty good, and that’s what most people do when it comes to investing, they look at the price it was last year, and say, it's going to go back to normal. And sometimes it works, but most time people end up losing money because they don’t analyze the companies true value
But here is the problem:
- The average stock market return is around 10% annual ( well – 3% because of inflation, so its more like 7%) – and that’s not including taxes if you sell.
- And the average personal loan is around 9.41%, or has high as 36%
- So imagine the pressure you are under to try to make that money back to actually back that loan
Tip: Stock market returns are not guaranteed, but loan payments are, they will come to collect every month. And if you stock paying, well, they will ruin your credit score by putting in collection for 7 years.
However:
- And if you build up your stock portfolio, eventually you can leverage it and borrow again it for as low as 2-5% with m1 finance
- But can, in a downturn, this could destroy you, so I think its easier to just build up your investment step by step.
Tip: If you need capital, then learn new skills, learn to analyze undervalued stocks, and sell for a profit. (it takes work, but its worth it). And Personally, I’ve only done this once with 1k because the interest rate is free with Robinhood up to 1k.
3. What Should I do Instead
- I recommend drip investing your Salary
- The idea is set aside no less than 10% every time you get paid to go out there and start investing
- This way step by step your investments can keep growing
For example:
- I started doing back in 2018 December, and I started with $7.78
- My strategy has been for a while to invest $500 per month into my ETF portfolio every month for the next 40 years ( because of its my passive investment strategy )
- However, during these times, I invested a lot more, because the market is on discount
But:
- At this rate with my 40k investment and addition 6k per year or $500 per month
- In 40 years at a rate of 7%, + 2.35% dividend
- I'm going to have 3.86 Million ( with a dividend rate of 2.35 means this will bring in around 90k per year)
However, remember:
- In 40 years 90k is only worth around 33.5k because of inflation
- And also remember this is just plan b and not really my real investment portfolio, it doesn’t include the stocks I put money into, the real estate I’m buying, and the income I reinvest from my business.
Tip: Do not believe the hype about you should have a plan b ( theirs nothing better than having an emergency fund, or extra money to fall back on)
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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.
1. The how is Simple
- If you want to borrow money, you can either use Margins with Robinhood to borrow and use your portfolio as leverage and pay interest
- Or you can get a personal loan
- Or even take money out your credit card to get it down, or ask a friend.
2. Stock Market ( since right now its half price, because of everything that’s going on)
- I’ve invested a little over 40k total in the past 3 months
- But Some people are wondering since loan rates are so low, should I borrow some money to start investing and flip
- And it sounds solid, you borrow money, invest it, then sell it and pay the loan and keep the difference
Here is the Pro:
- Say for example you find the next Apple, you want to invest in airlines, and cruises or AMC since they have lost so much money in the past 3 months
- So if you borrowed 10k for example and held it for a year and hopefully it recovers
Example:
- Buy AMC for $2.25, Invest 10k and that’s around 4,444 shares
- And if it goes back up to its highest point this year of $7.76 Back in February
- That means you could sell for $34,488 and keep a profit of $24,488 ( after you pay back the loan)
Tip: And that sounds pretty good, and that’s what most people do when it comes to investing, they look at the price it was last year, and say, it's going to go back to normal. And sometimes it works, but most time people end up losing money because they don’t analyze the companies true value
But here is the problem:
- The average stock market return is around 10% annual ( well – 3% because of inflation, so its more like 7%) – and that’s not including taxes if you sell.
- And the average personal loan is around 9.41%, or has high as 36%
- So imagine the pressure you are under to try to make that money back to actually back that loan
Tip: Stock market returns are not guaranteed, but loan payments are, they will come to collect every month. And if you stock paying, well, they will ruin your credit score by putting in collection for 7 years.
However:
- And if you build up your stock portfolio, eventually you can leverage it and borrow again it for as low as 2-5% with m1 finance
- But can, in a downturn, this could destroy you, so I think its easier to just build up your investment step by step.
Tip: If you need capital, then learn new skills, learn to analyze undervalued stocks, and sell for a profit. (it takes work, but its worth it). And Personally, I’ve only done this once with 1k because the interest rate is free with Robinhood up to 1k.
3. What Should I do Instead
- I recommend drip investing your Salary
- The idea is set aside no less than 10% every time you get paid to go out there and start investing
- This way step by step your investments can keep growing
For example:
- I started doing back in 2018 December, and I started with $7.78
- My strategy has been for a while to invest $500 per month into my ETF portfolio every month for the next 40 years ( because of its my passive investment strategy )
- However, during these times, I invested a lot more, because the market is on discount
But:
- At this rate with my 40k investment and addition 6k per year or $500 per month
- In 40 years at a rate of 7%, + 2.35% dividend
- I'm going to have 3.86 Million ( with a dividend rate of 2.35 means this will bring in around 90k per year)
However, remember:
- In 40 years 90k is only worth around 33.5k because of inflation
- And also remember this is just plan b and not really my real investment portfolio, it doesn’t include the stocks I put money into, the real estate I’m buying, and the income I reinvest from my business.
Tip: Do not believe the hype about you should have a plan b ( theirs nothing better than having an emergency fund, or extra money to fall back on)
* PRO TIP*
INFORMATION IS EVERYTHING
👕Merch👕
https://teespring.com/stores/tommybryson
✅2 FREE AUDIOBOOKS✅
https://amzn.to/2Enayo8¬¬¬
⚡FREE KINDLE UNLIMITED⚡ (traditional reading)
Link: https://amzn.to/2VGbxt9
👨🏽💻DISCORD PRIVATE GROUP👨🏽💻
Discord: discord
✔ Help Us Reach 250,000 Subscribers: https://goo.gl/0wvm6w
😎All My Social Media😎
Link: https://linktr.ee/tommybryson
*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.
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