Buying shares on a loan

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JamesChan

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Some nice prices out there at the moment. There is a company I'd like to invest in however I don't have the cash up front. I'm considering taking a loan of say 3K over 12 months to buy some stocks with an ISA. Worse happened if I lost 3K its not the end of the world.

Any thoughts or advice?

Has anyone done this before?
 
I'm considering doing this with a balance transfer on a credit card to get an interest free loan until Dec 09.

Not sure it is the best idea in fairness but some time soon there has to be a good opportunity to grab a bargain.
 
I've considered the credit card approach too. My only question is how can you max out one card before balence transfering it? Would you fund a trade account directly via a credit card or would you do it another way? Otherwise I can't see how you'd extract all the cash from it.
 
Most card transfers can go to pay off an overdraft on your current account, so it would be direct money going to your main bank account.

And yes I'm sure this mentality is what got us in this situation in the first place. Not sure I will follow through on the plan.

Out of interst which company are you thinking of investing in?
 
Thanks for the tips. I'd rather not say the specific company I'm following however its in the freight forwarding sector. I'll watch it a couple more days before making a final decision. :)
 
jdphil said:
Most card transfers can go to pay off an overdraft on your current account, so it would be direct money going to your main bank account.

And yes I'm sure this mentality is what got us in this situation in the first place. Not sure I will follow through on the plan.

Out of interst which company are you thinking of investing in?
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Q.E.D.
 
westernforce said:
Trading is risky enough without borrowing the stake as well
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bang on

do not borrow money to trade or buy shares with,

you should only be doing this with MONEY YOU CAN AFFORD TO LOSE. not money that you have to pay back into the future.

this idea, in my opinion is a very big mistake. dont do it.
 
Lunacy.

If you can't raise money any more cost-effectively than on a credit card you can't afford the risk.

How much money do you think you're going to make on these shares? 10% 20%? You'll probably pay a handling fee around 3% to transfer the balance, 3% for the cash advance (most credit card providers will see this as a cash advance rather than a purchase of goods) plus your commission. That's if everything goes to plan. With blue chip stocks moving 20% and more in a day, you'd be mad to risk it.
 
Mr Browns happy

counter_violent said:
There are reasons why govt's around the world are panicking you know !
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Good post CV

Buying shares on a loan

Gordon Brown thinks they are a safe bet and he as bought all of us £2000 worth each


can"t even work out if the guys math is correct because I can"t get enough Zero"s on my pocket calc :eek:

Just hope he don"t get one of those nasty margin calls :)

Andy
 
The advice re not borrowing money to trade is sound, however it's what we all do when we trade on margin....Double think.
 
I would not borrow to buy any shares at any time. However, there are pension fund bargains out there right now for the young person looking ahead ten years who can pay cash for them.

Might get cheaper still, before they go up. I can't help on that one!

Split
 
jiggly said:
you should only be doing this with MONEY YOU CAN AFFORD TO LOSE.
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I was told this when I first started trading, probably the best bit of advice I've ever received (maybe).

Despite the fact you are now thinking "It's only three grand" should the time arise and it's all gone, you will feel rotten and dejected.

Opportunities can always be found, no point in crippling yourself so there's nothing left when the next one comes along!
 
JamesChan said:
Some nice prices out there at the moment. There is a company I'd like to invest in however I don't have the cash up front. I'm considering taking a loan of say 3K over 12 months to buy some stocks with an ISA. Worse happened if I lost 3K its not the end of the world.

Any thoughts or advice?

Has anyone done this before?
Click to expand...

im off down the knocking shop to have unprotected sex with a crack addict dose ridden hooker,

any thoughts or advice?
 
Some good responses from you guys. Interesting to see each and every one of your opinions.

I'll be sure to update this post in the future. I'll make the decision in another few days or so.
 
Personally, I think you need to resolve your personal financial issues before you start trading.

If you don't have 3K in cash to hand, then you are not in a very good position financially and you will reap far greater rewards resolving this issue. Trading will not resolve that issue for you as you will have far too much emotional attachment to the trade to manage it properly.

Are you quite young ? Or are you heavily in debt ? I'd have thought most people would have a small pot of money to fall back on in case of hard times & 3K is a very small amount.

If debt is your issue, you need to focus on paying it off so you reduce your interest payments, that's much more rewarding than most investments you can make.

**** - I sound like Suze Ormann :eek:
 
JamesChan said:
Some nice prices out there at the moment. There is a company I'd like to invest in however I don't have the cash up front. I'm considering taking a loan of say 3K over 12 months to buy some stocks with an ISA. Worse happened if I lost 3K its not the end of the world.

Any thoughts or advice?

Has anyone done this before?
Click to expand...


As other people have already said if you can't afford to loose the money then you can't afford to trade.

Wait till you have money availble to trade and proper money management in place before borrowing money trying to make quick buck.
 
nunrgguy said:
The advice re not borrowing money to trade is sound, however it's what we all do when we trade on margin....Double think.
Click to expand...

That of course, is certainly true if you haven't got the financial assets to cover your margin.
 
Are you quite young ? Or are you heavily in debt ? I'd have thought most people would have a small pot of money to fall back on in case of hard times & 3K is a very small amount.
Click to expand...

Yeah I'm young - 21. Debt's aren't a massive issue. Maybe 2-3 pay checks until completely cleared.

I see theres some posts from people saying be prepared to lose 100% of your investment. Whilst that situation is possible I consider it highly unlikely as I'll be setting a minimum bail out should things take a turn for the worse and I need to do damage control.

I'm looking at a short term ish investment for the moment. Next week I'm finalising some things and I'll of course update on my decision. Some of you have greater levels of acceptable risk. Its still interesting to see the views of others here.
 
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