Should you borrow money to bag a sharemarket bargain? |
Should you borrow money to bag a sharemarket bargain?
April 12, 2026 — 5:10am
You have reached your maximum number of saved items.
Remove items from your saved list to add more.
Save this article for later
Add articles to your saved list and come back to them anytime.
There’s a reason why one of Warren Buffett’s most famous pieces of advice – to be fearful when others are greedy, and greedy when others are fearful – is enjoying a revival among investors right now.
With the sharemarket still experiencing sustained pressure, savvy investors are eyeing up an opportunity to bag themselves a bargain. But the problem for many is that this particular dip has arrived after years of sustained cost-of-living pressures that have resulted in people either failing to save, or draining what savings they have.
It’s little wonder, then, that there is so much chatter around borrowing money to invest. One of the most common ways you can do this, especially when the loan is being used to invest in the market, is through something called a margin loan.
For the unfamiliar, margin loans are similar to a car loan or a home loan in that they are a very specific loan type with strict rules around what the money can be spent on. For margin loans, that purpose is buying shares, exchange-traded funds (ETFs) or managed funds.
On the surface, the basic maths of borrowing money to invest seems pretty straightforward and attractive.
Let’s say you want to take out a loan for $50,000 and invest it into the sharemarket. With an average annual return of between 9 and 12 per cent, and an average interest rate of 5.5 per cent, you’re set to walk away with somewhere between 3.5 and 6.5 per cent profit each year for........