Asked by Anonymous

Should i take up a personal loan to invest more?

  1. I have a year of annual income saved in my bank that is accruing interest. 2. I have a set amount of additional income + variables that will be coming in for at least another 12 months. 3. I draw a full time pay on top of no.2 What I intend to do is to get a loan of about 5-6% int p.a and return them in 12 mth, while I invest the full amt into a diversified investment (part stock part p2pL) which gives me 9-12% p.a. (with risk involve) What would the pros and con be? Thanks so much guys!
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    • Ck Chai
      Ck Chai
      84 Answers, 126 Upvotes
      Answered 1w ago

      I won't recommend taking up a loan to invest via P2P as there is possible default risk...

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    • Lee Chun Kiat
      Lee Chun Kiat
      15 Answers, 18 Upvotes
      Answered 2w ago

      P2P is a high risk investment which you should expect 10-20% default rate (to be conservative).

      Unless you are already generating consistent profits for quite some years using the same method (which I don't you do), it is always not advisable to fund your investment with loans.

      Lastly, 4-6% additional profit doesn't justify the risk involved for such investment.

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    Yong Kah Hwee
    Yong Kah Hwee

    Top Contributor (Dec)

    423 Answers, 580 Upvotes
    07 Jan 2019

    If you are absolutely sure that your investment can give you that 9-12%, then sure, why not?

    However, like what you said, there are risks involved. Thus, it is never a good idea to take up a loan for investment purposes. You always need to think of the worst case scenario: the company going bankrupt. What do you do then?

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