Re: Taking out a prosper loan to buy stocks
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What was it like a 6% compounded return he would have to achieve to make money on this?
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Don't be ridiculous. How can you think that borrowing money at 13% and using the funds to earn 6% could possibly make money?
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It's a PRINCIPAL PAYDOWN loan. He is paying 30k over 3 years to borrow 25k now. That's only 5k that he has to make over 3 years on the stock market to make money.
If he puts the 25k into the market now and doesn't touch it, then yes after a 6% to 7% return he has more than 30k after 3 years.
26750 after year 1.
28622.5 after year 2.
30626.08 after year 3.
As I have already stated, I am not saying it is foolproof, but it isn't a HORRIBLE idea. Many people are already doing the float thing (taking loans just to use the money to make them) on prosper already.
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