One of the things you want to avoid at all costs is bad trading. They will make you lose money and even ask you to leave the complicated world of investing. To the point it is important to avoid these scenarios not wanted that sometimes you will have no choice but to apply for a class of loans to have liquidity. Especially when your operations do not develop as you initially wanted and you have to face expenses especially quickly. For example, meeting your tax obligations, paying for your vacation trip or buying state-of-the-art information equipment.
On more than one occasion you will have found that you need money but you cannot sell your shares in the financial markets. As a consequence of the fact that its current price is quite far from the purchase price. It is a very unwanted situation that can invite you to demand a loan that meets these needs. Of course not through a personal credit where it is enabled with an interest rate that can reach 10%. To which must be added the possible commissions and management expenses that it may include. Not surprisingly, you can make this financial product more expensive by up to 3%.
To solve this problem presented by some small and medium investors, so-called investment loans have been designed. They have very specific functions that can be very useful at some point in your financial life. Of course, it is not a soft financing, that is, without interest. But a good part of the offer is marketed with better contracting conditions. Although it is true that its offer is not very extensive by financial institutions.
Non-underselling loans
From this general scenario, there are many types of credit in these formats. One of the most relevant is to advance money so that you do not have to sell your shares. They usually grant between 5.000 and 20.000 euros that you can allocate for this purpose. With an interest rate that can drop to 6% depending on the offer you select from now on. On the other hand, you will have a repayment term that can reach ten years. Although what it is about is that the capital gains that you can obtain in the equity markets exceed the interests that are going to apply to you for the contracting of these financial products.
It is a line of credit that you should only use in the most dangerous moments of your operations on the stock market. Not as a common norm in your performances. Since they will have a real cost that you will have no choice but to comply with it. One of the scenarios in which this financing is necessary is when you have been immersed in a downward spiral in the stock market. And you will have no other solution than to wait a while to sell the shares. If possible once you have returned to the original price level.
Liquidity in investment funds
Another of the formats enabled by the markets are those that target investment funds. On this occasion, this type of loan is intended for shareholders of investment funds that want financing for different purposes (renovation of a flat, purchase of a car, investment in stock markets ...) and do not want to renounce the tax advantages that their seniority as holders of the funds brings them. There are very few lines of credit drawn up under these characteristics. But either way, it can get you out of trouble if you have taken positions in this class of investment products.
One of its most relevant contributions is based on the fact that you will maintain your investment in the funds at all times, but with a substantial difference and that is that you will have total liquidity to meet a series of expenses. Its flexibility will be another of the common denominators since grant up to 60.000 euros in a repayment period of 8 years. It will be a very useful way to preserve your investments in the funds against any scenario adverse to your interests. Where in addition, they will apply a more competitive interest rate than in consumer or personal loans. Not surprisingly, it is their sole purpose and you can only request them to secure positions in this financial product so popular among small and medium investors.
How to avoid bad sales on the stock market?
Of course, one of the worst situations is when you have to sell your positions in the stock market for any incident in your personal life. This is what this special kind of loan is for. So you can continue with your positions in the financial markets and at the same time have the necessary liquidity to face your most urgent expenses. In any case, you will have to check if the interest rates demanded by these products compensate you for the operations. Because it may be the case that you have to pay more money to opt for this special strategy.
In this sense, the types that apply these loans to you move in a band that goes 7% and up to 10%. To all this you have to add the possible commissions and management expenses that these well-defined lines of credit incorporate. It will be time to take the calculator and verify that your financial effort will not be less than the possible capital gains that will generate the movements that you are going to make in any of the financial markets where you have opened positions at that precise moment. Because it will not always be a profitable operation for your interests. To the extent that it may vary depending on the operation you have performed. Where you will not always have the same needs, as it is logical to understand.
When to contract these credits?
There will always be some scenarios more than others where it will be necessary to contract this very specific financing. You will have no choice but to demand a liquidity tip so as not to carry out a bad operation in the stock market (or in other financial products? As for example, in the following situations that we expose you below.
- When you think that the value where you have opened positions has a bullish run of a certain intensity and in that not in a long time you can reach the desired objective. But with the serious problem that you will not have money, or at least very little, in your checking account.
- In the moments to wait rush situations of financial markets. But for any circumstance you need to face a series of expenses that are immediate and that do not require waiting.
- By the time a Change of trend in your securities portfolio but your domestic economy does not allow you to continue with open positions much longer than desired. With the risk of selling your shares with high losses.
- En corporate movements that induce that the value of the shares are going to skyrocket in the next days or weeks. In this sense, you cannot miss the business opportunities that come your way. It should be remembered that they do not appear every day and it is advisable to take advantage of these exceptional situations.
- But especially when you are losing a lot of money in equities and think that in the short and medium term everything can change. It will not be a matter of leaving you many euros along the way. And in this sense, granting a loan can solve some other problem from now on.
Risks of performing these operations
In any case, you must also show some caution when requesting a loan of these characteristics. Because you can aggravate your financial capacity to levels that you cannot even assimilate. Therefore, be very careful, because you cannot forget that in the end you will have to return the monetary advance and its corresponding interests and even commissions if they arise. Not surprisingly, the main danger of formalizing this demand is that your level of indebtedness can rise significantly. With problems so that you can make it to the end of the month in the best possible conditions.
On the other hand, the budget for the year can also misalign you because from that moment on you will have no choice but to assume more expenses. This is when you have to ask yourself if it's really worth it ask your bank for an investment loan. The answer lies in your ability to cope with this very special operation. Where it will be very important to evaluate what are the capital gains that you can generate in each of the operations affected or sensitive to the granting of a line of credit for this purpose. Not in all cases, the answer will be the same, far from it, as you can imagine.
From now on, it will only be you yourself who has to reflect on this investment need. So that in this way, you make the best decision to defend your interests. That they will not always coincide in all the profiles of small and medium investors. With a completely different treatment from now on.