Questions about loans and credit cards?

Question

I have been thinking about getting a loan or using credit cards to open up a brokage account. To take out a loan would I need collectral? How would I go about opening up a brokage account and using credit cards to open the brokage account?

Answer 1

This sounds like a bad idea. You need to ask yourself some questions:

Do you have any savings?

What is the intererst rate on the credit card you would use to borrow the money?

Can you expect to earn a rate of return greater than the credit card interest rate?

What would you do if your investment lost money?

Answer 2

HI SB,
You have asked a good question but what you are proposing is very risky. Building wealth is a slow diligent process. People who seek to get rich quickly often get scammed or lose it all. I have several portfolios and have had a few brokerage accounts. Before anyone should consider investing they should have an emergency fund of at least $1000, no credit card debt of any kind, be investing 15% of your paycheck in a retirement account (Roth Ira or 401K). Investing with borrowed funds is very risky. Many people has lost everything, had serious financial set backs,
ruined marriages, ruined lives. I even paid off my mortgage
before I invested in any non-retirement investments. By paying off my mortgage early I saved tens of thousands of dollars. Anyone who tells you to be in debt and take advantage of the tax consequences is seriously misguided.
If I pay a dollar in interest and uncle sam gives me back 30 cents I still lost 70 cents. If you give me a dollar I will give
you 60 cents back. Is that a better deal for you. By going slow and methodically plodding allows you to gradually develop the skills and the wisdom to manage the growing assets. No load mutual funds are preferred because they give you diversification and actively managed assets at a very low price. Historically, if you choose wisely you can
easily average 12 %. That means every 6 years your assets
will double. Last year was a very good year. All my portfolios earned at least 15%, several were over 30 % and
one earned 73%. With investing you are saying that you will
not touch the money for at least 5 years. The longer the better. I hope not to touch my investments for another 20 years. I have friends who are retired whose assets earn
more each year than they draw out. The first step to this
program is living below your means. Learning to save.
Without that you will never get ahead. The steps I have shared are time tested. It takes an average 17 years to become a millionaire. Can you envision life without a
mortgage payment, a car payment, a credit card payment?
That is where I am with only practicing this discipline for 5 years. Want more information? Check out www.daveramsey.com or www.crown.org. for more specific steps. Also surround yourself with like minded people.
Dave Ramsey also has a radio call-in show that airs
weekdays for 3 hours in the early afternoon (2pm to 5pm Eastern). Best regards!

Answer 3

You cannot fund a brokerage account with a credit card. No brokerage will allow you to do that. I know from personal experience. That law was put in place to protect consumers form going into furthur debt by both loaning money and then also losing it (worst-case scenario) in the market. I know it may seem unfair but it was meant as a consumer protection. Also, sorry but no bank will loan you money to open an account either. Banks will loan you money to buy real esate though. Why don't you check that out?
I am a lender on Prosper.com too. You could join my group and then post a loan request and use the funds for the stock market. The link to my group is

http://www.prosper.com/public/groups/group_home.aspx?group_short_name=Militaryfriends

good luck!

Answer 4

you can take a personal loan:

Personal loan should not be used for other purposes like buying a property etc as the interest rate are very high. It should be used solely to meet your personal needs or short term needs like going on a holiday, meeting your medical expenses or for miscellaneous causes.

Usually, these loans are processed very quickly, since they are used to meet emergency expenses. With the lavish lifestyles, people want instant money to fulfill their rising aspirations. Recognizing this need, many lenders today are offering personal loans in attractive packages.

Answer 5

You need to deposit money to open a brokerage act. Loans do need collateral even if it only your auto title. those kinds of loans are bad loans.