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India_Bull
Senior Member
Joined: 19/Sep/2006
Location: United States
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Posts: 2296
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   Posted: 24/Nov/2006 at 7:29pm |
Hi Vipul,
I agree to disagree with you. Buy taking a loan you are using other`s money to build wealth which is not possible if you use your own resources. (Lets say I am taking a loan of 10-20 Lakh)
I am assuming you are getting minimum return of 25% on your investement on a loan which you have taken at a rate of 12 %.
Though I have not taken any loan so far for this and have seen people repenting for doing so , the idea is not bad and we shd be able to identify the proper stocks for the same.
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India_Bull forever Bull !
www.kapilcomedynights.com
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xbox
Senior Member
Joined: 10/Sep/2006
Online Status: Offline
Posts: 2001
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Posted: 24/Nov/2006 at 9:21am |
I agree to disagree with you. Buy taking a loan you are using other`s money to build wealth which is not possible if you use your own resources. (Lets say I am taking a loan of 10-20 Lakh)
I am assuming you are getting minimum return of 25% on your investement on a loan which you have taken at a rate of 12 %.
Though I have not taken any loan so far for this and have seen people repenting for doing so , the idea is not bad and we shd be able to identify the proper stocks for the same.
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SANDEEP, if making money is so simple then why people are doing other jobs to make money. If recipe so making money is so full proof then ppl all around the world will join stock market. In that case there will be any banks. They themself will put money in markets rather than lending to you.
Can anybody in this world garrentee 25% return ? (if yes, then I have business for him).
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Don't bet on pig after all bull & bear in circle.
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kulman
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 24/Nov/2006 at 10:08am |
Very interesting discussion! If you really listen to the successful investors, the first thing they advise is "Investments in shares MUST be out of your SAVINGS only".
Any kind of leveraging is a dangerous recipe for disaster. I have seen my close raltives lose their net worth early this year as they thought that money making was so easy...and tried to 'invest+trade' on borrowed money generated via "Personal Loans" and "Top-up Loans on existing home" routes. They got over-confident due to 'beginner's luck'.
I totally agree with the view "money making is not so easy".
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Life can only be understood backwards—but it must be lived forwards
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basant
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Joined: 01/Jan/2006
Location: India
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Posts: 18403
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Posted: 24/Nov/2006 at 10:12am |
Again Kulmanjee though I do not advise everyone to buy shares on leverage but it is not 100% incorrect. The point is why people go wrong is when they buy any tom, dick and harry from their money. As they say money does not have any colour and the stock does not know that it is in your DP because you have taken a loan or broken your FD. As long as you do not mess up buying junk stocks (trying to double money each year) you should do OK. Now if you do not buy decent stocks you would lose money irrespective of whether it is your own or borrowed. 
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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kulman
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Joined: 02/Sep/2006
Location: India
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Posted: 24/Nov/2006 at 10:18am |
Very true...but if you look at how much one would lose if he invests own money (savings) in junk stocks & compare it to putting borrowed/leveraged funds in same stocks...that will make the point clear, won't it?
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Life can only be understood backwards—but it must be lived forwards
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basant
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Location: India
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Posted: 24/Nov/2006 at 11:01am |
The extent of loss in both cases will always be 100% because the Bank will never wait foir the stocks to hit ground zero. FInally it is about the right stocks and most of the people who borrow are Mungerilals so they become the suckers. I have said this on the forum that today I started on leverage and that too they are in a few stocks but by what ever reason they have worked out well so no one is complainning but many of the people who knew that I started on borrowed capital in 2001-02 told me to trade and take out the interest part but I declined so today that initial capital (borrowed money) has become more then a 10 bagger in totality but at that time things were different; PE's were compelling etc etc. On the whole it is really dangerous but not 100% incorrect. 
Edited by basant - 24/Nov/2006 at 11:06am
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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BubbleVision
Senior Member
Joined: 05/Aug/2006
Location: India
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Posts: 3142
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Posted: 24/Nov/2006 at 11:27am |
I am in Full agreement with you BasantJi.... most of the people who borrow are Mungerilals so they become the suckers. It all comes down to knowing what you are doing... However taking a loan to "invest" in F&O could act as playing with petrol in one hand and fire on the other.
BTW, did you read that Cook interview....
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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basant
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Posted: 24/Nov/2006 at 11:36am |
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Yes, I have been awefully tied up but would update that for sure!
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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