New Delhi, July 25 -- It may be appealing to take out a personal loan to invest in real estate, stocks or even other types of mutual funds. However, there are several risks associated with gearing. This article will explain when it may be appropriate, when it is not, and how to effectively assess the outcomes.

We call this approach leverage. Essentially you take out a personal loan to offset a large sum of money, which you then invest with the expectation that your return will outpace the interest charged on your personal loan. Put simply, even if it does offer increased exposure it inherently increases financial risk.

"Taking a personal loan to invest is generally not advisable. Personal loans come with fixed EMIs and repayment timelin...