Can we finance our investments in the stock market by buying back credits?

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Investing in the stock market often requires a large starting capital. And if the repurchase of credit represented a lever to allow financial investments?

The grouping of credits makes it possible to reduce the overall amount of its monthly repayments. By consolidating his credits and renegotiating his rate as well as his schedule, we can then smooth the repayments and greatly reduce his monthly payments. Knowing that the repurchase of credit makes it possible to regroup as well real estate credits as consumer credits, why then not to take out a credit to invest in stock market?

 

Include your loan in a loan repurchase to buy stock securities

Include your loan in a loan repurchase to buy stock securities

The logic seems simple, it is enough to take out a consumer credit in addition to another credit and then to renegotiate it via a repurchase of credits. By taking advantage of the particularly attractive rates at an instant t on the market, could we not carry out a perfect operation to create capital? We often read on different sites like actu-bourse.fr stories of traders and hedge funds who succeed year after year to obtain returns above 10%. Mathematically the case seems viable. And it is clear that even minimal risk taking is a condition for capital growth.

 

The obstacles to financial investment by buying back credit

The obstacles to financial investment by buying back credit

Two elements, however, darken the picture. First, taking out credit is often subject to verification. It is asked to justify a project as well as proof of its completion once the money is released. In the case of a request for a new loan, it is difficult to convince a banker to lend the requested amount.

Besides, he will be right. Because the first piece of advice we give to apprentice investors is the following: only invest sums we are ready to lose. Of course with careful investment and good portfolio management capital loss can be avoided. But it takes a lot of time, patience and training. As purse guru Marren Cuffet put it so well, “In the business world, the rearview mirror is always clearer than the windshield. If the past were the only factor to take into account in investment, historians would all be rich! ”No one is immune to a stock market crash, no matter how healthy the financial markets are.

In the event of a hard blow, it then takes many years to raise the bar. Years during which the investor who has taken out a loan to invest in the stock market will spend paying interest while piling up the years of deficit.

 

Preference for a moderate risk investment

credit loans

Even if it is possible, on paper, to initiate a loan to invest in the stock market, it is necessary to favor investments with lower risk. Renegotiating loans with investments that amortize repayments is a better strategy for securing capital growth.

Also be careful not to give in to the appeal of financial products that offer easy capital formation. One thinks for example of CFDs which are leveraged investments. Often put forward for their ability to deliver significant returns, it is important to know that more than 90% of traders end up ruined. Some of these products can even cause losses greater than the capital initially invested. You might as well avoid a new loan to make a clean sweep of debts contracted towards a broker.

In summary, it is better to wait until you have finalized your repayments and have built up capital to begin to diversify your investments and build a stock market portfolio.

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