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Should I borrow to invest, or borrow to pay off debts to avoid bankruptcy?


In North America, the interest on money you borrow for investment purposes is tax deductible. The interest on money you borrow to go on vacation, or to purchase any good for personal use, is generally not tax deductible.

So if you have a lot of debts, but still have some credit, does it make sense to borrow money, invest it, and hope to earn enough to repay your other debts?

In some respects this strategy makes sense, because the interest on the money you borrow to invest is tax deductible, so you it may be possible to generate positive returns.

However, as the experts at investment newsletter point out, the number one goal of any investment is not to make money, but even more important it is to NOT lose any money. Because you are attempting to earn money to repay debts, and therefore avoid bankruptcy, you may be taking more risks than you should, and that is not a good idea.

Our advice? If you have debt problems, borrowing even more money to invest in the hopes that you will earn more money to far too risky a strategy. We do not recommend it.

A better strategy would be to make a personal budget, cut your expenses, and if necessary consider debt consolidation and other more practical options.

Posted by Editor Bankruptcy Alternatives @ 3:27 pm is a free resource
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