Should I Take a Personal Loan to Invest
A personal loan for investment may be a risky business but in another hand, the profit of a business is the reward of taking risks only Taking some calculated risk possibly bring you profit in the best scenario. Blog: http://www.gorelations.com/blogs/2559/27454/should-i-take-a-personal-loan-to-inves
A personal loan for investment may be a risky business but in another hand, the profit of a business is the reward of taking risks only Taking some calculated risk possibly bring you profit in the best scenario.
Blog: http://www.gorelations.com/blogs/2559/27454/should-i-take-a-personal-loan-to-inves
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<strong>Should</strong> I <strong>Take</strong> a <strong>Personal</strong> <strong>Loan</strong> <strong>to</strong><br />
<strong>Invest</strong><br />
<strong>Personal</strong> loans are designed <strong>to</strong> provide monetary help for the persons who are in<br />
need of urgent fund. The best use of personal loan can be availed if the lent<br />
amount is used in medical expenses, urgent travel, marriage expenses etc. But<br />
there comes a big question if a personal loan is intended <strong>to</strong> invest for a high and<br />
prompt return.<br />
Dreaming of earning a lot while investing borrowed amount is probably a bad<br />
financial decision. The reasons which have made many financial experts advice<br />
people <strong>to</strong> stay away from investing by borrowing are revealed in this article.
Before knowing the adverse effect of investing by borrowing let us check the<br />
available investment options in India. Here are some of the best investment<br />
options in India that reap maximum return:<br />
PPF – Public Provident Fund: With a minimum of ₹ 500 up <strong>to</strong> ₹<br />
100,000 can be invested and the return on this is tax-free. The current<br />
interest rate on PPF account is fixed at 8.7% per annum.<br />
<br />
Peer <strong>to</strong> Peer Lending: Commonly known as P2P lending is an<br />
alternative <strong>to</strong> bank loans. This is a type of investment where the role of<br />
banks or lending institutions is eliminated. Any interested person can<br />
invest in P2P lending through online platforms. Some of such platforms<br />
are Lendbox, i2ifunding, Faircent etc. One can expect around 9.69%<br />
return on investment on average seasoned return.<br />
National Savings Certificate (NSC): With the minimum of ₹ 100<br />
deposit, the inves<strong>to</strong>r can choose the tenure of deposit as either 5 years or<br />
10 years, the rate of interest on the investment differs as per the tenure.<br />
The rate of return on this is about 7.9% as of the year 2017 and maximum<br />
₹ 150,000 tax returns can be filed on the same.<br />
<br />
Senior Citizen Savings Scheme (SCSS): With the rate of interest close<br />
of 8.4%, this is the best investment option for those who are 60+<br />
years. This investment is a tax-free investment. Any person more that<br />
60n years can invest in SCSS through the post office. It offers maximum<br />
benefits and maximum returns with minimal investment.<br />
<br />
Bank Fixed Deposit: Banks fixed deposits are one of the widely<br />
accepted traditional ways of investment. The interest rate and norms may<br />
very bank <strong>to</strong> bank. The interest rate is different for general inves<strong>to</strong>rs and<br />
senior citizen inves<strong>to</strong>rs. One can invest for the minimum of 7 days and<br />
the maximum of 10 years. The return on this investment is 6.75% for 30-<br />
day FD scheme, 7.5% for deposit period of 60 <strong>to</strong> 90 days, 7.75% and 8%<br />
for 120- days and 6 months deposit term, respectively.
Sukanya Samriddhi Yojana: One of the great investment options for<br />
the parents of a girl child. This is mainly for future benefits of your<br />
daughter either for her education or wedding. The return on this<br />
investment is about 8.1% per annum.<br />
These are the most popular and minimal risk associated investment options<br />
available in India. <strong>Invest</strong>ing any of these schemes will bring high return but <strong>to</strong><br />
get that high return one must invest. Whether a personal loan for investment is a<br />
good idea or not can be gauged by the checking the given points.<br />
<br />
Check the <strong>Loan</strong> Rates<br />
The basic objective of availing the loan is <strong>to</strong> earn a profit by investing. So<br />
before availing the loan, one must check the interest rate of the loan. The<br />
interest rate on the personal loan must be lower than your gain from the<br />
investment. One can earn profit only if he has <strong>to</strong> pay less and earn more.<br />
<br />
Study <strong>Invest</strong>ment Performance<br />
Before investing one must check the performance of the previous years. Some<br />
of the investments such as s<strong>to</strong>cks and mutual funds which give high return come<br />
with high risk of capital loss. So one must do a quality research before jumping<br />
in<strong>to</strong> s<strong>to</strong>ck market especially when the investment is done with the borrowed<br />
money.<br />
<br />
Review the Fees<br />
As interest rates of a personal loan brings your profit down, there is another<br />
culprit <strong>to</strong>o who will eat up your profit. The next profit consumer is the 'Fees'.<br />
One has <strong>to</strong> pay fees <strong>to</strong> the lender in various names such as processing fee,<br />
documentation charges, stamp duty charges etc <strong>to</strong> the lender. Actually, if a<br />
person buys s<strong>to</strong>cks from an online buyer, you have <strong>to</strong> pay trade commission<br />
every time you complete a transaction. Even for investing in mutual funds <strong>to</strong>o<br />
one has <strong>to</strong> pay management fees.<br />
A personal loan for investment may be a risky business but in another hand, the<br />
profit of a business is the reward of taking risks only Taking some calculated<br />
risk possibly bring you profit in the best scenario. One must do a good research<br />
on investment plans <strong>to</strong> earn a profit by investing borrowed money.