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Is It Wise to Invest in Stocks Using Debt?

Debt is generally divided into two types: consumptive debt and productive debt. Consumptive debt is debt that is used up to buy consumer goods, while productive debt aims to generate income - for example, setting up a business or buying value-increasing instruments such as shares in public companies.


Invest with debt

Fall for Coaxing


A person who goes into debt for stock investment or trading is usually tempted by the lure of large profits by certain parties. In fact, there is nothing guaranteed in achieving profits in the realm of stock trading. The process also requires careful analysis. Don't let the debt used go to waste.


It Might be Wise, if...


Any form of investment requires proper calculation. There is always a risk behind every potential. Therefore, make sure you manage your debt as investment funds wisely with the following steps.


  1. Know in advance the pluses and minuses of a stock through the process of fundamental and technical analysis.

  2. Start from buying a small lot and calculate the capital gain, whether it is greater than the debt interest or not.

  3. Protect your portfolio with the cut loss feature to avoid bigger losses.

  4. Make sure you can pay off your debt even if your investment or trading has not made a profit until the end of the tenor period.


Better to Use Cold Cash


However, it is highly recommended to use "cold cash" or funds that have been budgeted from the beginning. This is also important for the psychological state of the investor or trader to remain rational while trading stocks.

 

Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).



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