knvg90300

Never. Even if you take a loan at 12% per annum and are able to make 15% per annum in market, you shouldn't be doing that because incrementally you are only making a difference of 3% at a very higher risk levels. It is not about what you make but what you can loose out of it. You are taking unnecessary risk for a very little gain.

The best approach would be to what you plan to pay back as loan EMI, use that as an option to put into mutual funds and it will be much better off.

Let me share some calculations and show.

In an ideal scenario if you have taken a loan of 5L at 12% per annum and make return of 15% per annum, for monthly calculation sake you will make an extra income of 0.25% per month which on a loan of 5L is 1250 Rs. I am assuming very simple calculation on EMI and loan payment just for the calculation sake. So do you want to take a burden of a personal loan for for5 years for the sake of 1250 Rs per month. I don't think it's worth it.

Now the EMI amount of loan is roughly 11k for loan of 5L at 12% interest for 5 years which is max tenure for personal loan. You need to pay that EMI from your pocket because your investment will not pay you regularly to pay the EMI back. So instead of paying the bank huge chunk as interest for a lumpsum investment in market at all time high and even take the burden of a loan, use the same amount as SIP into the market and build the corpus over the next 5 years.

Read https://shabbir.in/right-investment-options/ where can even find an arbitrage with EMI and bank FD at the same rate but it is not financial good decision to be doing it.