Dedicating money to investments is one of the smartest things you can to do plan for your future. There are so many ways to invest. From mutual funds, the stock market, bonds, real estate, or investing money in your own business, there are endless ways to make your money work for you. But what if you can’t afford to invest? Many people are now taking advantage of the multitude of ways to safely borrow money to place in investments. Banks today are increasingly open to finding the best options to help low-income clients invest in their future.
Borrowing from Private Lenders
The most obvious option for borrowing to invest is to take out a loan or line of credit from your bank. Your financial advisor will create a tailor-made financing option based on your previous credit history, collateral options, lending terms, and how much money you want to invest. For those of us with poor credit, other options are available. Many private lending institutions have financing options available for low-credit clients, sans the predatory interest rates made infamous in the years following the 2008 housing crisis. Sites like moneybanker.com allow prospective investors to filter through hundreds of private lenders to find a loan that is best suited to their needs. Investors can even work with representatives to find a loan that suits their portfolio and goals for the future.
Taking out a Mortgage
Those with considerable home equity may choose to take out a second or even third mortgage or refinance their existing mortgage. If your investment is successful, the interest will cover the cost of your mortgage and leave you with excess money to put away. As we saw in 2008, borrowing money against your home can be very risky if your investments are unsuccessful or the market takes a turn for the worse. If you decide to borrow against your home, it is important to work with a trusted fiduciary who will make financial decisions with your best interests in mind. There are also companies that offers reverse mortgage that can make you save more and pay less.
Selling off Shorts
Stock savvy investors have the option to sell short stock to raise money for their investments. Short selling involves borrowing stocks from other investors and selling the borrowed stocks because of the belief that they will decline in price. Once an investor has sold the borrowed stocks at a higher price, they wait to buy back the stocks at a lower price to repay the person they borrowed them from. The difference is what the short stock investor gains in income. Films like The Big Short and Betting on Zero (a documentary on the infamous Herbalife scandal) highlight just how complicated betting on short stocks can be. For this reason, it is recommended that short stock buying be reserved only for investors with a strong working knowledge of the stock market.
Regardless of the amount of money you make from your investments, you will have to pay back your loan plus interest. It is important to have a plan for paying back your loan before you invest so you don’t find yourself in trouble with debt. Whether you choose to work with a private lender, invest in stocks, or borrow against your house, working with a trusted financial advisor is your best bet to make smart financial decisions and find success in the world of investments.