Taking a loan in a financial emergency is not a new thing for anyone. However, while selecting a debt instrument, it is better to look at all the possible options and their interest rates. According to investment and tax experts, sometimes people opt for high-interest unsecured loans without considering that mutual funds or stock investments can also be pledged and borrow on unsecured loans like personal loans. Loan can be availed by lending institutions at very low rate of interest. or credit card debt. In fact, loans against mutual fund investments and stock investments also help an investor avoid capital gains tax.
Like in favor of loans against mutual funds or stocks instead of opting for unsecured loans personal loan Vineet Khandare, CEO & Founder, MyFundBazaar said, “Being an asset-surplus liquidity deficient country, Indians always prefer a secured credit with a home, agriculture Earth, Sleep, and vehicle loans. With the progress of digitization in the ecosystem, consumers will be able to take advantage of digital with ease property Easy, to take credit. Eventually, as stocks, mutual funds, bonds, and insurance become more digitized to become prevalent and viable in the ecosystem of APIs, users can pledge, establish credit on them, and use them as additional collateral for other purchases and expenses. Will get wide opportunities to do. ,
Talking about how loan against mutual funds or stocks is beneficial for a borrower, Manish P Hinger, CA, Founder, Fintu said, “Loan against mutual funds or stocks can be a good option if you need to borrow money and invest in mutual funds. Funds need to be invested in. Or stocks that you can use as collateral. This can be a good way to access cash without selling your investments, which allows you to avoid capital gains taxes and grow your investments. I can help.” However, the Fintu expert said that one can avail the loan only up to a certain limit of his holding. The limit is higher for debt investment and lower for equity investment, This is because equity shares or equity mutual funds are volatile in nature.
“One of the major advantages of taking a loan against your mutual fund or stock investments is that it offers a lower interest rate as compared to a personal loan or credit card. This is because a loan against investment is a secured loan. Another advantage is that one can continue. Earn returns on your investment. Though the bank has the right to sell mutual funds or stocks in case of default, the investor will continue to earn market-linked returns in case of no default. Many banks provide such loans online which makes it more convenient to avail,” said Manish P Hinger.
Hence, taking a loan against mutual funds or stock investments can be a wise decision but it will depend on the financial status and goals of an individual.
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