Borrowing money to buy shares for cashflow?
Buying individual/small basket of high dividend shares is exposing you to 50%+ and very fast potential downswings in capital/margin calls. There is no free lunch in returns in this respect: nothing that pays enough to help you pay your mortgage at a high rate won’t expose you to a lot of potential volatility. Main issue here looks like you have very poorly performing rental investments you should consider selling or switching up rental usage/how you rent them (moving to shorter term, higher yield lets, ditching any agents/handymen that are taking up capital/try and refinance to lower mortgage rates etc etc). Trying to use leveraged stock returns to pay for poorly performing housing investments is like spraying gasoline all over a fire. Fixing the actual issue in hand first is virtually always the best course of action in these scenarios. Don't do it.  I would sell one of my investment houses and use the equity to pay down your primary mortgage.  Then I would refinance my primary mortgage in order to lower the payments. This depends on: Here in the US where I am, interest rates were around 3.9% when I fixed my mortgage. This underperforms the market, e.g., a total market ETF like $VTI or an SP500 ETF like $VOO have expected returns of ~7+%, the current market growth rate. So, in theory I am better off paying into the market, and making returns greater than my interest rate, rather than paying into the equity.  HOWEVER, past market returns do not guarantee future market returns. The market could reset. It could crash. Are you willing to accept this risk? You have to analyze what happens if the market suffers say a 30% correction and you lose a lot of money quickly.  I would certainly not invest in individual (non-ETF) stocks, or you are really exposing yourself to risk. It's generally a bad idea to use low-risk credit (low-risk in sense you're practically guaranteed to be forced to pay it off) to buy high-risk shares. In optimistic scenario, the profit from shares would be higher than your credit percentages. In less optimistic scenario you come with nothing. In worse scenario you have worthless shares and another credit to pay.  If your only problem is the non-profitable property, you can always sell it and get rid of negative cash flow. It won't affect your quality of life negatively. In your high-risk scenario you trade the opportunity for a bit better life with for a risk of turning it into disaster for you and your family. "Maybe a bit off topic, but I suggest reading ""Rich Dad Poor Dad"" by Robert Kiyosaki. An investment is something that puts money to your pocket. If your properties don't put money to your pocket (and this seems to be the case), then they're not an investment. Instead, they drain money from you pocket. Therefore you should instead turn these ""investments"" into real investments. Make everything to earn some money using them, not to earn money somewhere else to cover the loses they create. If that's not possible, get rid of them and find something that ""puts money into your pocket""."
"Basically, you either borrow money, or get other people to invest in your business by buying stock or something analogous.  Sometimes you can get people to ""park"" money with you. For example, many people deposit money in a bank checking account. They don't get any interest or other profit from this, they just do it because the bank is a convenient place to store their money. The bank then loans some percentage of this money out and keeps the interest. I don't doubt that people have come up with more clever ways to use other people's money. Borrowing money for an investment or business venture is risky because if you lose money, you may be unable to pay it back. On the other hand, investors expect a share of the profit, not just a fixed interest rate." The only reason to lend the money in this scenario is cashflow. But considering you buy a $15000 car, your lifestyle is not super luxurious, so $15000 spare cash is enough. Yes this would be the same as when a corporation sells bonds. If it is the same as you describe. A product page would make it possible to give you a definitive answer. Also I strongly advice against taking out this type of loan if not for investment In the case you mentioned, where a private company owners will take debt with the purpose of  buying out other owners, is this done through a share repurchases program (I understand private companies issue them, even though it's rare)? Thank you for the insights. They will make money from brokerage as usual and also from the interest they charge you for lending you the money for you to buy your shares on margin. In other words you will be paying interest on the $30,000 you borrowed from your broker. Also, as per Chris's comment, if you are shorting securities through your margin account, your broker would charge you a fee for lending you the securities to short. "It may be margin loans or credit lines given to brokerages. I have no idea what a loan book is though so don't I don't really know. Also no one ""plays"" in equity markets with borrowed money unless they know for sure what they are doing or they have collateral as in the case of margin." "This summer I used a loan from my 401(k) to help pay for the down payment of a new house. We planned on selling a Condo a few months later, so we only needed the loan for a short period but wanted to keep monthly payments low since we would be paying two mortgages for a few months. I also felt like the market might take a dip in the future, so I liked the idea of trying to cash out high and buy back low (spoiler alert: this didn't happen). So in July 2017 I withdrew $17,000 from my account (Technically $16,850.00 principal and $150 processing fee) at an effective 4.19% APR (4% rate and then the fee), with 240 scheduled payments of $86.00 (2 per month for 10 years). Over the lifetime of the loan the total finance charge was $3,790, but that money would be paid back into my account. I was happy with the terms, and it helped tide things over until the condo was sold a few months later. But then I decided to change jobs, and ended up having to pay back the loan ~20 weeks after it was issued (using the proceeds from the sale of the condo). During this time the market had done well, so when I paid back the funds the net difference in shares that I now owned (including shares purchased with the interest payments) was $538.25 less than today's value of the original count of shares that were sold to fund the loan. Combined with the $150 fee, the overall ""cost"" of the 20 week loan was about 4.05%. That isn't the interest rate (interest was paid back to my account balance), but the value lost due to the principal having been withdrawn. On paper, my account would be worth that much more if I hadn't withdrawn the money. Now if you extrapolate the current market return into 52 weeks, you can think of that loan having an APR ""cost"" of around 10.5% (Probably not valid for a multi year calculation, but seems accurate for a 12 month projection). Again, that is not interest paid back to the account, but instead the value lost due to the money not being in the account. Sure, the market could take a dip and I may be able to buy the shares back at a reduced cost, but that would require keeping sizable liquid assets around and trying to time the market. It also is not something you can really schedule very well, as the loan took 6 days to fund (not including another week of clarifying questions back/forth before that) and 10 day to repay (from the time I initiated the paperwork to when the check was cashed and shares repurchased). So in my experience, the true cost of the loan greatly depends on how the market does, and if you have the ability to pay back the loan it probably is worth doing so. Especially since you may be forced to do so at any time if you change jobs or your employment is terminated." "It will depend somewhat on the rules where the company is formed, and perhaps how much you're talking about investing. I don't know about Canada, but when I've formed businesses in the U.S., I've been advised to invest some of the money as an equity investment, and the bulk of the remainder as a loan. You say ""more shares"", so it sounds like you've already invested some money and need to inject another round. If you make a loan to the company, make sure everything is done at arm's length -- you'll need to wear the hat of the Company Management and sign a contract with yourself, use a market-based interest rate, and make sure the company is paying you back with interest. An alternative which may work if you expect cash flow soon is to pay for certain expenses personally and then submit an expense report to the company, which will pay you back. Overall, a quick consultation with your accountant should be a relatively inexpensive way to get the best answer for your specific circumstances." You can't make money on the way down if it was your money that bought the shares when the market was up.  When you sell short, borrowing lets you tap into the value without paying for it. That way, when the price (hopefully) drops you profit from the difference. In your example, if you hadn't paid the £20 in the first place, then you would actually be up £5. But since you started with £20, you still show loss. As others said, borrowing is the definition of selling short. It is also simply the only way the math works. Of course, there is a large risk you must assume to enjoy benefiting from something you do not own! The typical deal is you can put 10% of your gross pay into the ESPP. The purchase will occur on the last deposit date, usually a 6 month period, at a 15% discount to the market price.  So, the math is something like this: Your return if sold the day it's purchased is not 15%, it's 100/85 or 17.6%. Minor nitpick on my part, I suppose.  Also the return is not a 6 month return, as the weekly or bi-weekly deductions are the average between the oldest (6 mo) and the most recent (uh, zero time, maybe a week.) This is closer to 3 months. The annualized rate is actually pretty meaningless since you don't have 4 opportunities to achieve this return, it's important only if the cash flow hit causes you to borrow to support the ESPP purchases. The risk is whether the stock drops the 15% before you can execute the sell to take advantage of the gain.  Of course the return is gross, you need to net for taxes.  Edit to respond to comment below - When I said meaningless, I meant that you can't take the 17.6%, annualize it to 91.2% per year and think your $1000 will compound to $1912. It's as meaningless as when an investor gets a 10% gain on a stock in one day, and (with 250 trading days per year) decides his $1000 will be worth $2 quadrillion dollars after a year. The 17.6% is significant in that it's available twice per year, for a true 38% return over a year, but if borrowing to help the cash flow, that rate is really over 3 months. Yes, you would.  You owe it to the person you borrowed the shares from. (source) "With (1), it's rather confusing as to where ""interest"" refers to what you're paying and where it refers to what you're being paid, and it's confusing what you expect the numbers to work out to be. If you have to pay normal interest on top of sharing the interest you receive, then you're losing money. If the lending bank is receiving less interest than the going market rate, then they're losing money. If the bank you've deposited the money with is paying more than the going market rate, they're losing money. I don't see how you imagine a scenario where someone isn't losing money. For (2) and (3), you're buying stocks on margin, which certainly is something that happens, but you'll have to get an account that is specifically for margin trading. It's a specific type of credit with specific rules, and you if you want to engage in this sort of trading, you should go through established channels rather than trying to convert a regular loan into margin trading. If you get a personal loan that isn't specifically for margin trading, and buy stocks with the money, and the stocks tank, you can be in serious trouble. (If you do it through margin trading, it's still very risky, but not nearly as risky as trying to game the system. In some cases, doing this makes you not only civilly but criminally liable.) The lending bank absolutely can lose if your stocks tank, since then there will be nothing backing up the loan." it is pretty much the same as a normal margin loan but cheaper because you don't own the underlying share.the if the margin is $1000 at 5% you could borrow $20000 in total so the actual amount would be $19000 in total that you would have to pay interest on so at the moment it is 5.1% which is $19000x5.1% /365 days =$2.66 a day and if the share price rises you don't pay extra in interest costs unless you have borrowed more.it still stays at 2.66 a day until you have sold the shares "Concerning the general problem of short selling and the need to borrow shares to complete the transaction : Selling short is a cash transaction.  Unlike a futures contract, where a short seller is entering into a legal agreement to sell something in the future, in the case of short selling a share the buyer of the share is taking immediate delivery and is therefore entitled to all of the benefits and rights that come with share ownership.  In particular, the buyer of the shares is entitled to any dividends payable and, where applicable, to vote on motions at AGMs.  If the short seller has not borrowed the shares to sell, then buyer of non-existent shares will have none of the rights associated with ownership. The cash market is based on the idea of matching buyers and sellers.  It does not accommodate people making promises. Consider that to allow short sellers to sell shares they have not borrowed opens up the possibility of the aggregate market selling more shares than actually exist.  This would lead to all sorts of problematic consequences such as heavily distorting the price of the underlying share.  If everyone is selling shares they have not borrowed willy-nilly, then it will drive the price of the share down, much to the disadvantage of existing share holders. In this case, short sellers who have sold shares they have not already borrowed would be paying out more in dividends to the buyers than the total dividends being paid out by the underlying company. There are instruments that allow for short selling of unowned shares on a futures basis.  One example is a CFD = Contract for Difference.  In the case of CFDs, sellers are obliged to pay dividends to buyers as well as other  costs related to financing. EDIT Regarding your comment, note that borrowing shares is not a market transaction.  Your account does not show you buying a share and then selling it.  It simply shows you selling a share short.  The borrowing is the result of an agreement between yourself and the lender and this agreement is off market.  You do not actually pay the lender for the shares, but you do pay financing costs for the borrowing so long as you maintain your short position. EDIT I realise that I have not actually read your question correctly.  You are not actually talking about ""naked"" short selling.  You are talking about selling shares you already own in a hope of maintaining both a long and short position (gross).  The problem with this approach is that you must deliver the shares to the buyer.  Otherwise, ask yourself what shares is the buyer actually buying if you want the bought shares to remain in your account. If you are not going to deliver your long position shares, then you will need to borrow the shares you are selling short for the reasons I have outlined above." This is certainly possible. There are lots of strategies that involve taking out loans to invest. However, they are all high risk strategies. There's a school district for a major US city that was able to get incredibly favorable loan terms because their repayment was assured by law. They borrowed a bunch of money and put it into a variety of sure things insured by reliable companies like Lehman Brothers. You can figure out the rest.