Should you borrow to invest? Looking to add to their investment in a hot, new stock, or to get in on the latest investment fad, or just because the market is hitting record highs, many novice investors take this step in haste, only to repent at leisure. Borrowing to invest in the stock market, otherwise known as using “leverage,” is perilous.
First of all, you’ll need to be able to keep financing the debt when interest rates rise. Right now, rates are low. But they won’t stay low forever. Keep in mind that stock markets are volatile, and there is no guarantee that the return you get warrants the cost of the interest on the loan.
