This may be due to the fact that any loan entails the payment of interest,along with the repayment of the principal amount. One can build financialassets with the help of loans only if the amount taken on loan is investedin an instrument where return on investment is higher than the interestpayable on loan. Earning such a rate of return, particularly in a safeinstrument, may not be easy. So, it would seem that it is not easy to buildfinancial assets with the help of personal loans. But if we examine theissue carefully, we find that it is possible to use personal loans forbuilding financial assets, too.

Financial assets can be built with the help of those loans whose repaymenthas to be made on ``reducing balance''. If the money obtained from such aloan is reinvested in any safe investment instrument, not necessarily givinga return higher than the rate of interest payable on loan, interest will beearned on an increasing balance. The loan will be completely repaid afterthe specified payback period, if stipulated repayment installments are paidregularly.

Meanwhile, the loan amount, invested in a safe instrument, will continue toearn interest and a sizeable amount will be built. If this amount staysinvested further in the same investment instrument, or is invested in someother safe scheme, the amount will continue to increase further. Thus,personal loans, where interest is to be paid on reducing balance, can beutilised to build financial assets. Money that is utilised to buildfinancial assets has to be repaid, plus have the interest paid on it. Butthe asset gets built because there is forced saving in repaying the loan.

One problem that may come in the way of those who want to build up assetswith the help of personal loans is that loans for building financial assets,especially large sums, may not be easily available. Even loans with highinterest rates, if the repayment is to be made on reducing balance, can beused to build financial assets. Smaller amounts of loans, where the purposeof raising the loan is not asked, may be available. These types of loans canalso be utilised to build financial assets.

Assets of any kind are useful, but financial assets may be more useful thanphysical assets in particular because financial assets can be quicklyconverted into other kinds of assets when required.

Financial assets can also be utilised for miscellaneous or sundry expenses.Moreover, they can be broken up into any denomination, depending upon thespecific requirement for funds. Financially unencumbered assets may also beused for raising more personal loans, if so required. Thus, we find that inmany respects, financial assets are better than other assets.

At present, loans do not seem to be available for the specific purpose ofbuilding financial assets. But in due course of time, such loan options maybecome available. But the principle or the possibility of building financialassets with the help of personal loans may be utilised by individualsprofitably, whenever such opportunities crop up.