Taking out a prosper loan to buy stocks

[Evan]

This whole thread must be some kind of joke I don't get. Between being sure you can make enough to counteract the 12% interest and being willing to pay that vig to stop yourself from spending too much money, I honestly can't believe you're serious.

[Shoe]

[ QUOTE ]
Why don't you just set up a Vanguard index fund to automatically deduct money from your checking account each month if the prime factor hurting your returns is lack of discipline?

This doesn't seem like a good idea at all...

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the main reason is because I am completely confident in my ability to beat any vanguard index fund.

[kimchi]

Unless you can show a long-term (ie- 5 to 10 years) of consistent outperformance at an acceptable level of risk, I'd say don't do it. I feel you're about to lose your shirt.

Besides, 12% is a HUGE hurdle to overcome. I pay a little over LIBOR rates for my margin, and even my current account overdraft rate is less than 12%.

Margin isn't really for investing - it's more suitable for trading or shorter-term investing opportunities.

If you desperately want to use margin, then I'd strongly suggest you only gamble with a small % of your portfolio. I keep a maximum of 30% of my portfolio exposed to margin, with a notional rtading requirement of around 5%. I never allow a trade or idea to risk more than 1% of my account equity.

I think you should concentrate more on preserving your capital than hitting for the fence every time.

[Shoe]

[ QUOTE ]
This whole thread must be some kind of joke I don't get. Between being sure you can make enough to counteract the 12% interest and being willing to pay that vig to stop yourself from spending too much money, I honestly can't believe you're serious.

[/ QUOTE ]

Although I know I am being extremelty optimistic, I am positive i can get at 20-30% annual return on my money by investing in individual stocks. Before you jump all over me, Warren Buffet says he could definitely get a 50% return on smaller portfolios.

[eastbay]

[ QUOTE ]
[ QUOTE ]
Why don't you just set up a Vanguard index fund to automatically deduct money from your checking account each month if the prime factor hurting your returns is lack of discipline?

This doesn't seem like a good idea at all...

[/ QUOTE ]

the main reason is because I am completely confident in my ability to beat any vanguard index fund.

[/ QUOTE ]

If the pride is any indication, this fall will be spectacular.

eastbay

[Shoe]

[ QUOTE ]
Unless you can show a long-term (ie- 5 to 10 years) of consistent outperformance at an acceptable level of risk, I'd say don't do it. I feel you're about to lose your shirt.

Besides, 12% is a HUGE hurdle to overcome. I pay a little over LIBOR rates for my margin, and even my current account overdraft rate is less than 12%.

Margin isn't really for investing - it's more suitable for trading or shorter-term investing opportunities.

If you desperately want to use margin, then I'd strongly suggest you only gamble with a small % of your portfolio. I keep a maximum of 30% of my portfolio exposed to margin, with a notional rtading requirement of around 5%. I never allow a trade or idea to risk more than 1% of my account equity.

I think you should concentrate more on preserving your capital than hitting for the fence every time.

[/ QUOTE ]

Thanks for the advice. If you count my retirment funds, this loan is nowhere close even 20% of my proftilio. I think the worst case scenario is I MIGHT only gain 10% instead of the 13% i am paying in interest. But if i missed just 1 or 2 monthly payments I am still better off taking the loan.

I definitely agree this loan is "thinking outside the box" and would traditioanly be frowned upon. But please provide me with some calculations on how much I would actually be losing out on. I don't think it would be more than 2-3k over 3 years maximum on average. And that is worst case scenario.

[Shoe]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Why don't you just set up a Vanguard index fund to automatically deduct money from your checking account each month if the prime factor hurting your returns is lack of discipline?

This doesn't seem like a good idea at all...

[/ QUOTE ]

the main reason is because I am completely confident in my ability to beat any vanguard index fund.

[/ QUOTE ]

If the pride is any indication, this fall will be spectacular.

eastbay

[/ QUOTE ]

I will keep you updated. Thanks for the support.

[jackblack73]

This doesn't make any sense. Just invest the amount each month that you would have paid as a loan payment and I'm pretty sure you'll make more money in 3 years than your method.

[Evan]

[ QUOTE ]
[ QUOTE ]
This whole thread must be some kind of joke I don't get. Between being sure you can make enough to counteract the 12% interest and being willing to pay that vig to stop yourself from spending too much money, I honestly can't believe you're serious.

[/ QUOTE ]

Although I know I am being extremelty optimistic, I am positive i can get at 20-30% annual return on my money by investing in individual stocks. Before you jump all over me, Warren Buffet says he could definitely get a 50% return on smaller portfolios.

[/ QUOTE ]
Arod can hit 40 home runs every year. Who cares?

I know nothing I say is going to change your mind, and I don't really care what you end up doing, so I'll just continue to be sure this is some sort of sick joke.

[Evan]

[ QUOTE ]

I definitely agree this loan is "thinking outside the box"

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Dude, seriously what the hell are you talking about?

[ QUOTE ]
But please provide me with some calculations on how much I would actually be losing out on. I don't think it would be more than 2-3k over 3 years maximum on average. And that is worst case scenario.

[/ QUOTE ]
Again, I have no idea what you're talking about, but if you think losing 2-3k is the worst case scenario here you might actually know less than I was giving you credit for.