Do you (or someone you know) borrows money from the bank to invest?

I will never understand the logic. If you are a good trader you will make the money without credit. Chances are if you need credit you are gambling.
 
Quote from da-net:

you would have to make monthly payments, but if you could take them from trading profits..well

as to the ridiculously low amount, that depends on what you call a ridiculously low number, plus it would be more a function of your relationship with your CC issuer and your limits..the ones i deal with would allow me to max out my CCs in a "check withdrawal" that could be deposited in my bank account In fact i get checks from them every couple weeks offering zero % for 1 year, but i destroy them...

as an example if you had mid 5 figures or low 6 figures available you could write a check withdrawal on, it would probably incur charges of $100 to $150, but that would be negligible imo for someone that wants to do it

dangerous, yes! but if someone wanted to do it...this could be a way
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True- the cash access line is usually 10-20% of credit line by default, but I never tried to contact the cc company to get it raised. The checks would probably be an easier option (I toss them too)
 
"If you are a good trader you will make the money without credit."

There are plenty of businesses that make money and fail due to lack of credit or needing extra money.
 
i also done this CC arb long time ago..bought some CD's right before (and some next day after)first cut. but right now CD's and money market rates are kinda low and more and more CC issuers want 3% for balance transfer..with good FICO score you can raise pretty good amount of money
 
Quote from nutmeg:

"If you are a good trader you will make the money without credit."

There are plenty of businesses that make money and fail due to lack of credit or needing extra money.
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Bullshit. It may take longer because you have no credit, but a good businessman will not go broke unless he was undercapitalized from the very beginning. If he was, he wasn't a good businessman.
 
Quote from crgarcia:

It's ill advised. Certainly I would never do it, but I want to know if someone borrowed here.

I knew (fast friends) some very rich guys who borrowed long term, making some easy money with buy and hold.
Of course during bear markets their accounts go down a bit, but they still withdraw to pay interests.

I guess they dont use much leverage.
Also I don't have the easy/cheap credit they have.
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if you take a good look on SP500 charts, you can notice, that during this january(which is not over yet) S&P lost almost all gains for last two years.. good luck with buy and hold on margin idea..
 
We have several bank accounts, all at the same bank. They are set up like that for tax purposes, different currencies etc.

I always keep a negative balance on every account. I don't worry about it because I'm using that money for investments. The amount borrowed is a small fraction of the total investments. I don't want to leave a positive balance in any account because it could collect interest and the tax rate is high on that. I total up all my interest charges on all the accounts and put that against the capitals gains for our investments.

Whenever I do any banking, I'm pretty sure the Tellers think that I'm really bad with my money. I'm sure they wouldn't understand my reason for always keeping a negative balance. They just think I'm borrowing from Peter to pay Paul all the time.
 
The advantage would be that you would not be subject to margin calls (assuming you let thigs get that far). Also if for example buying at a cyclical low if it takes longer to recover than you expected you could pay interest from sales with a reasonable chance you would make it back if you were right about the cycle and stocks went up 3x. If what caused the cyclical low has further to run then you are at risk of the bank calling its loan.

I would consider it for cyclical markets at a low with corresondingly low interest rates and where margin is not yet a good idea. As for this thing about not needing leverage, leverage will allow considerably greater compounding of returns.
 
Quote from HolyGrail:

I will never understand the logic. If you are a good trader you will make the money without credit. Chances are if you need credit you are gambling.
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When borrowing there are no margin calls, just monthly payments.
With some loans you only have interest monthly payments (paying the principal in whole at the end).

You can "get your money for nothing" with a good FICO score. With margin you always need some money to start with.

Ever wondered how moguls like Donald Trump got out of bankruptcy?
(they had very negative -minus- net worths back then): cheap/easy credit and good investment opportunities.
 
Quote from crgarcia:

When borrowing there are no margin calls, just monthly payments.
With some loans you only have interest monthly payments (paying the principal in whole at the end).

You can "get your money for nothing" with a good FICO score. With margin you always need some money to start with.

Ever wondered how moguls like Donald Trump got out of bankruptcy?
(they had very negative -minus- net worths back then): cheap/easy credit and good investment opportunities.
More...

I understand that. All I am saying is it is not necessary. If you're good, you will make it. You can never borrow your way to success.
 
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