Investing with a loan / a credit

Hi guys !

I was wondering what you think about loaning money for investing it. I’ll explain :

Some of my friends are not interested at all about investments as they don’t want to take any risk. Even though I try to explain to them the different options, they don’t want to hear it.
For me, it’s a shame so I’m thinking : what if I propose them a fixe interest rate in exchange of them loaning me the money ?

Here is what I propose : 3% yearly interest with at least a loan duration of 1 year. In the meantime, I invest this money and make additional money. I make sure to write a debt recognition for my friends as an official paper. Of course, I explain them what I do with their money.

Another way : I basically took a consommation credit at a 4.7% rate. With it, I invested in Bali in a house that will give me a 22% of investment return.

What do you think about that ?

I personally wouldn‘t give or take money from friends / family that has to be paid back. Could cause trouble in the relationship.


I don’t think there’s anyway to have a guaranteed yearly return of 3% so there’s a risk you’re not able to repay your friends.

And I’m definitely very skeptical of claims of 22%, esp. without leverage :slight_smile: There’s likely a fairly high risk.


You can, but you want to take that responsibility and hassle (and risk of course)? Say you get 7%, so net 4%, that would be 4k from 100k borrowed. That’s something but not worth the trouble ( at least for me personally). You might also get entangled with tax stuff. How do you declare the money borrowed to you? In all effects it will be in your broker/bank account under your name.

22% looks great, I wonder how can anyone (legit) advertise a [guaranteed] return of 22%… You will have repairs, taxes and all that comes with real estate. Also currency risk to take into account.


Just be aware that such personal and consumer credits will give you a heavy burden when you’re trying to get a real mortgage in Switzerland. All banks will look at the tax statement and see the private debt and politely show you the door.


I’d probably add to the list a deadly pandemic which is probably not helping the rental market in Bali…

@Olivier96 I join the list of people who said they’d never take friends’ money for risky investments, if it goes bad you lose the money…and maybe the friends, just when you’d need them most


Friends money: if they’re good friends, like others here, I’d be vary that it’d put a strain on our relationship. Either I’d have to put a fixed date for the payment of the principal and would run the risk of them needing the money before that and getting sour about it, or they could call the debt back anytime and there’s no way I could make it a successful venture (I’d even run the risk that they call it back at the worst time and I’m not actually able to repay it).

Consumer debt: I’ve turned it in all the ways possible and couldn’t find a way to make investing consumer debt loaned in the swiss way profitable. The interests can be low enough but principal repayment requirements are way too high. If you can find a loan that doesn’t ask for principal repayment for at least one-two years, it might be worth it with proper risk assessment (and I’d be interested to know where you got it), otherwise, I’ve found that the only two kinds of loans that are actually investable are mortgages and lombard loans (if and only if you don’t hold a cash/bonds position at all - mandatory ones like second pillar excepted).

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Totally agree, and even more so because it looks like you would go for very risky investments.


This is a relationship advice, if you want to avoid money troubles with your friends avoid to have money involved.
You really don’t want this.