You want to start investing in stocks as soon as possible but you still don’t have the cash to start investing.
Should you borrow money to invest in stocks?
This week, I am saddened to receive this message:
“Your story is very interesting. I believe you. I would be happy if you can share your abundance. You know at this moment I am in need of money. Can I borrow a certain amount so I can invest in the stock market and then pay you back the moment I earned?”
Can he borrow?
For sure he can.
Can I lend him?
Yes, I can.
I will NOT.
Although this may look like a good debt, the stock market is volatile. The price goes up and down anytime. Therefore the gains are not fixed but the monthly interest of the money he will borrow is fixed.
And although I may not ask for interest, since he is in need of money, the possibility of selling the shares at loss and withdrawing the fund for emergent need is very high.
Thus, lending him money will just turn him into a modern day slave.
Bo Sanchez’ Thoughts
Watch Bo Sanchez as he gives his thoughts on a similar issue.
(video credit to Joey Tayaban of facebook.com/colmejoey)
Before investing in stocks, it is very important to:
- Pay off your bad debts
- Save up for an emergency fund
- Get insured
- Have a basic understanding of what stock market is and how it works
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