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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

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<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.

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