In recent years, more people have started becoming aware of the stock market. Unfortunately, most new investors don’t understand the basics of the stock markets and try to make a quick buck. This makes them lose their hard-earned money. Some of them take instalment loans to pay off their debts arising out of stock trading while others use it do more speculative trading. But is it right?
Stock market trading is risky
Every trader must know that stocks are risky. You can’t magically pull 20% returns on a trade. However, if you borrow to trade, you will definitely pay 20% interest on your loans. Before trading, you must assess your options carefully. We advise you not to engage in speculative trading. Instead, do the qualitative and quantitative analysis of a stock and then make sure that you are trading/investing wisely.
Even the most seasoned investors have their bad days. As a newbie investor, you should be extremely careful with your money and invest only in companies that offer good returns.
Loans are a bad choice
Experts often advise new traders to only trade with the money that they are ready to lose. However, in expectations of high returns, traders often invest more money. When a stock they choose starts taking a nosedive, they try to buy more shares in order to bring down their average buying price. They also trade on the basis of market news which ultimately leads to their downfall.
Some traders go for binary options and other similar financial products which are not just riskier, but could also make you part with more money than you originally invested. Such investments, when they go wrong, make people bankrupt. If you are trading with borrowed money, you would not only lose your own capital and the borrowed funds, but would also have to pay back the loans with interest. This could be detrimental to your financial health.
Are instalment loans safer?
Instalment loans are considered safer than payday loans or other high interest, unsecured loans. These loans have to be paid in easy instalments spanning over 3 to 6 months. You don’t have to pay a lumpsum amount to the lender within a month. Therefore, they are less intimidating. However, this doesn’t mean that you should take multiple instalment loans to fund your trading activity. We suggest you to take these loans only for financial emergencies and repay them as soon as possible.