Is Borrowing Worthwhile?
Wednesday January 21, 2009
Many people choose to borrow to invest in boom times, but few are taking advantage of low interest rates while stock markets are still somewhat unstable. This is unfortunate, as there is still money to be made from investing in shares on stock markets. While you must certainly be very careful in the amount of risk you take, with such low interest rates there is a lot to be gained from successful trading on stock markets.
With the stock markets not experiencing sustained overall growth at the moment, the old wisdom of simply spreading your investment portfolio over many sound investments is somewhat riskier for trading with borrowed funds than it normally would be. If stock markets you are investing in are experiencing sustained growth overall, then using borrowed funds will often work out well as long as you are sensible and trade correctly. In times of overall decline or unsteady growth, however, you will need to be much more careful in the investments you make. If you do not have the time or resources to do careful research into where to put your money, then you may need to avoid trading with borrowed money for the moment.
If you can expend the effort and resources in order to track down investments that have continued to grow in the crisis and can confirm that they are reasonably likely to keep growing, then you may wish to consider using borrowed money while interest rates are so low. Again, it must be stressed that using borrowed money will always increase the level of risk you are undertaking, so you must know your financial limitations in case you end up in a situation where it might be wise to start quickly selling shares.
Please click on our St George directshares sponsor banner if you would like to see what St George directshares can offer you for better trading on stock markets.
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