Should You Take a Loan and Invest in Crypto?

in LeoFinance •  2 months ago 

In one of the financial seminars that I have attended in the past Chinkee Tan a famous financial educator in the Philippines stated that there are 2 kinds of debt. The good and the bad, he said that good debt is something that you get/acquire which would generate money in the future. On the other hand, bad debt is something that was borrowed but instead of generating income or it appreciates over time it does the opposite.

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Not all of us have the money nowadays to spend. Due to the pandemic majority of businesses went bankrupt as they are not able to shift to the new normal. We are taken the world by this concern and some are having a hard time getting back on track. I have more default clients now and collecting money from them is quite a challenge.

Cryptoverse has been more active than before. New projects, token sale, etc are popping almost every day promising awesome returns for the early investors and traders. The #FOMO is there and one way or another I am one of those who are thinking if I will be jumping into the bandwagon or not.

A great example would be Hive, right now it is being sold at $0.12 but previously I saw that it is sold at $0.11 - $0.10 you may see that the amount is just a few cents difference but if you buy it in bulk the amount would really vary.

At one point, I did plan to take a loan from a bank and invest it in cryptocurrency. Knowing that I don't have any credit to anyone yet I think that it would be worth a try. But as I try to weigh everything right now, getting a loan then just paying it off by installments would be something worth thinking about.

Some factors that I consider are the volatility of the crypto that I will be investing in. What is the trend? Is it on a downward trend or an upward scale? How much information do I know about the project and what if I lost my job in the next few weeks and I still have this loan balance unpaid?

It is really tempting to get one right now, and if I am just on my own huge chance is already applied some form and applied already. But as I consulted it to my wife, she asked me if it is really a need for us to get a loan now to buy some cryptocurrencies and I stopped for a while and think.

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Moderate your greed Oliver, moderate...

Just work your way up and you will be there.

In your case, have you considered getting a loan to buy/invest in crypto?

Thank you for reading my blog post today.

Oliver

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The feel the opposite way Of what Eddie earner shared.

Never invest more than you can lose.

If I lost money in crypto than I lost money is crypto. But if on top of that I had to pay back a loan... it would feel tragic.’

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That was my stand previously as I am adding some spare cash from our budget. Like the amount that I intend for snacks are put into crypto. But because it is really tempting to invest now it is making me think if I should do it or not.

We decided not to in the meantime, as stream of income is not that fluid. I might have troubles with repayment.

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When I first got started in crypto, I cut my grocery and eating out budget to get started. It has been two years now and the money is still there and has even grown slightly. It was a great decision.

You should take loan or not will determined by the below answer.
How you will pay that loan?

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true to that, what will be the means of paying it.

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If someone do not have income in which loan monthly installments can be accommodated then better not to to take loan.

Seems you got a very wise and smart wife. Congratulatiobs

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Truly a blessing as I always makes decision without thinking that much. I always have the final say on the household but she makes the recommendation and revisions. It is way better to ask as there are some info that I might have missed looking into.

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If you can afford the repayments, it makes sense if you believe the price will increase. You buy 1 BTC for $15k and take a 60-month loan. Im pretty sure that BTC will be worth more than $15k maybe $16-17k after interest in 5 years time.

You could also stake stable tokens in dollars to earn 11%. This would be very low risk as you'd always had the dollar value of the loan. You find a loan at 6-7% then earn 11% by staking it. Simples.

Anyways, its something that to most people sounds crazy but when you think about it, taking out a loan to invest can have many benefits.

Great share :)

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If you can afford the repayments, it makes sense if you believe the price will increase.

This one is a gem! Knowing that we can afford those repayments should be the first priority. Looking on our finances right now getting one is a big NO 😂. We have permanent jobs but right now, as my wife's currently not working due to pregnancy our income's not in good shape.

Thank you for your insight. Truly it was helpful!

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No worries my friend, im in the same boat as you. Both full time, wife's work is closed due to COVID and im on 80% salary. If you have crypto already, you can always use it as collateral against a loan in defi world. Borrow at 6-7% and stake it for 11%. It's a very interesting subject as money can be made by using good risk management.

I will keep an eye out for your future posts, not many people are writing about subjects like this and talking about how to take advantage of available credit. It's a money-making tool many are afraid to use.

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It is a strategy (the loan), but it also has its degree of risk.

Every investment has its risks and it is somewhat interesting to take advantage of some opportunities like HIVE at that moment but as we know of the high volatility of cryptocurrencies it becomes something very risky. It is up to you to decide if it is worth taking the risk.

"If" I could go back in the past ... would anyone risk it?

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A less exciting option is to deposit stablecoins like USDT, USDC, DAI, or TUSD to earn interest. Crypto.com, for example, is paying between 10 and 12% for stablecoins. If you are paying less than that in interest, then you don't have to worry as your earnings will pay the majority of the interest. You would have to repay the principal out of pocket.

Or, save up to deposit stablecoins. Use the interest earned to buy crypto. If you want to increase your income, you simply deposit more stablecoin.