Using Personal Loans to Buy Shares

Dear ladies and gents,

Is it possible to get a personal loan for the purpose of buying shares?

Thank you for your feedback

Hi there,

Swiss lenders generally are not concerned with the way in which money obtained through personal loans is spent.

You can use money borrowed as a personal loan to buy stocks and other securities. However, you will need to have good creditworthiness in order to get a personal loan. You should note that the returns on your investment in securities may not cover the cost of the loan if those securities do not perform well. In the worst case, the securities may decline in value and you may not even recover the money which you spent on them, much less cover the interest on the loan.

Lombard loans, which use securities as collateral, are an alternative for traders who want to maintain liquidity without selling securities. However, you need to own the securities initially in order to offer them as collateral against the loan.

Borrowing money to invest in stocks is rarely a good financial move. While there is a chance of turning a profit, the risk of losing the money and being straddled with a debt is very real. Ideally, you should only use loans to invest if you have the capital to repay the loans whether or not investments perform well.

Best regards from Moneyguru

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