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There are few (if any) responsible uses of personal credit for personal investing. Though a profit could be made on borrowed funds as long as the secondary investment yielded a higher rate than the loan interest, it is unusual to find safe, responsible, investments with returns that outpace borrowing rates.
An simplified example of why some people think this is a good idea. Let's say you take a cash advance on a credit card that charges 5% interest (or a loan from a family member who wants a return of principal + 5% interest). If you use the money to invest in an opportunity that yields a 10% return over the borrowing period, you will make a 5% return.
But hold on. Most lending entities, from credit cards to banks, charge borrowing interest rates that are higher than secure savings rates. So, if your bank will loan you $10k at 3% interest, that same bank probably only pays 2% on most of its stable savings accounts. This pattern will be true everywhere else in the financial world. Borrowing rates will always be higher than safe investment yields.
Therefore, it would be difficult to argue that using credit for investing is "responsible". Most investments with a high enough return contain significant risk--if your investment doesn't pay off, you will lose more than the value of funds invested--you will also lose interest you paid to borrow that money.
What else can I help you with?
Can you explain what an authorized user is on a credit card?
An authorized user on a credit card is someone who is allowed to use the card but is not responsible for paying the bill. The primary cardholder is responsible for all charges made by the authorized user.
Is there an online course I could take to learn more about socially responsible investing?
www.investopedia.com has an article concerning online courses about socially responsible investing. The course is done by email, and seems to be somewhat respected.
How can I authorize someone to use my credit card?
To authorize someone to use your credit card, you can add them as an authorized user on your account. This allows them to make purchases using the card, but you remain responsible for the charges.
Who is responsible when your spouse uses your credit card and leaves you with the debt?
You are, I'm afraid. Your credit card is a binding contract that makes you responsible for all debts incurred. It is your responsibility to collect from anyone that you allow to use your card. If the use was without your consent, then it gets a lot more complicated.
Will balances still appear on your credit report after taking out a loan for your sister and letting her use your credit cards if she can't get credit on her own and you have to co-sign?
Yes, as a cosigner you will be responsible for the debt, so it will reflect on your credit report.
Who got credit for investing in Linux?
Who got credit for investing Linux
What would constitute a responsible use of credit?
A responsible use of credit is paying off your credit cards each month. Another example of using credit responsibly is using it when you need it only.
Are there any tax advantages for investing in annuities?
The tax advantages for investing in annuities is most have. On your tax return you will recieve credit for having it.
Can you explain what an authorized user is on a credit card?
An authorized user on a credit card is someone who is allowed to use the card but is not responsible for paying the bill. The primary cardholder is responsible for all charges made by the authorized user.
Is there an online course I could take to learn more about socially responsible investing?
www.investopedia.com has an article concerning online courses about socially responsible investing. The course is done by email, and seems to be somewhat respected.
What is considered socially responsible investing?
"The purpose of socially responsible investing is to maximize financial return while providing social good. Sometimes socially responsible groups aim for investing that benefits the environment, consumers, human rights, and minorities. They also tend to avoid investments related to items such as alcohol, tobacco, gambling, weapons, etc."
How can I authorize someone to use my credit card?
To authorize someone to use your credit card, you can add them as an authorized user on your account. This allows them to make purchases using the card, but you remain responsible for the charges.
Who is responsible when your spouse uses your credit card and leaves you with the debt?
You are, I'm afraid. Your credit card is a binding contract that makes you responsible for all debts incurred. It is your responsibility to collect from anyone that you allow to use your card. If the use was without your consent, then it gets a lot more complicated.
Will balances still appear on your credit report after taking out a loan for your sister and letting her use your credit cards if she can't get credit on her own and you have to co-sign?
Yes, as a cosigner you will be responsible for the debt, so it will reflect on your credit report.
What are the risks associated with investing in a mortgage credit swap?
Investing in a mortgage credit swap carries risks such as potential default of the underlying mortgages, changes in interest rates, and market volatility. These factors can lead to financial losses for investors.
Can you get a credit card at age 13?
No, they can't accept that their parents or one of them authorize that they can, and if they do they need to really check that their son or daughter is responsible enough for a credit card. A minor may be able to use an adult's credit card if the credit card owner has officially authorized the minor to use it.
Who is responsible for a deceased person credit card debt in North Carolina?
The estate is responsible for the decedent's credit card debt.
