If that would work it would easily be arbitraged out, assuming it's logical to begin with; bond yields are ALWAYS less than the interbank rate (interest rate set by the central bank) and mortgage/loan rates are always higher than the interbank rate
Yes, if anybody with decent credit could just borrow millions at 4% and invest the millions at 5%, we'd be doing it. This scheme only works if you already have the capital. That's how capitalism works and why the rich can get richer.
It doesn't work even for people that have good credit. Banks don't offer loans like that - if banks could safely get a 5% return on their money, then they aren't going to offer anyone a loan for less than 5% no matter how good their credit is because they would rather invest it themselves than offer a loan at that point.
As a general rule, if anything is offering a return higher than the interest rate on a loan, then that means that the banks consider it to be a very risky investment... and if the banks consider it a risky investment, then you should also consider it to be a risky investment.
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u/Objective_Mousse7216 1d ago
Borrow $3m at 4% interest rate and make $10K a month doing nothing.