--write about borrowings
on Investment
Answers
Answer:
Check out below for the Answer!
Explanation:
Borrowing to invest is a medium to long term strategy (at least five to ten years). It's typically done through margin loans for shares or investment property loans. The investment is usually the security for the loan. Investing with borrowed money is also known as “leveraging”.
As long as your investment increases at a rate that is higher than your borrowing costs, you can make money. Borrowing to buy mutual funds or other investments can be an effective way to boost your potential returns, but it involves more risk than paying for an investment outright with cash. However, whether your investment makes money or not, you still have to pay back the loan plus interest. If you rely solely on your investment returns to cover your borrowing costs and your investment falls in value, you could end up defaulting on the loan. It is the definitive case of an idea looking good on paper and too often turning out to be disastrous in real life.