Should I borrow money for an investment?

For the majority of people, however, sticking to their income flow or savings to invest is often the better choice. The only time when it really makes sense to borrow money for an investment—known in financial lingo as “investing a loan”—is when the return on investment (ROI) on the prospective investment is high and the level of risk is low.

Is borrowing to invest a good investment strategy?

FP Answers: Borrowing to invest is a financial strategy that presents opportunities, but also pitfalls. It would be prudent to review your overall financial planning before choosing to implement a leveraged investment strategy since it can add a significant amount of risk to a financial plan and is not appropriate for all investors.

Can borrowing increase investment returns?

Borrowing can potentially increase investment returns because it allows you to apply leverage. Leverage is the ability to purchase a larger investment than you could by paying cash. For instance, suppose that you can buy $10,000 of stock by borrowing the money instead of paying in cash.