Rich vs rest: How the wealthy use loans to grow while most middle class fall into debt traps

A viral post on X (formerly Twitter) by chartered accountant CA Nitin Kaushik has ignited a conversation about India’s growing obsession with loans and the dangerous trend of using borrowed money to invest in the stock market.

A few months a post, which has garnered millions of views, shared a screenshot claiming a 40% gain in small-cap stocks — funded entirely through a personal loan. While the post was intended to celebrate quick profits, it instead drew widespread concern over the rising “borrow-to-invest” culture among retail investors.

According to Reserve Bank of India data, Indians borrowed over Rs 3 lakh crore in personal loans between 2023 and May 2025, much of it from young, salaried individuals. During the same period, the number of demat accounts crossed 19 crore, indicating an unprecedented surge in retail market participation. Experts fear this combination of easy credit and market enthusiasm is pushing many first-time investors toward financial overextension.

Debt as a lifestyle, not a strategy

In his viral thread, Kaushik highlighted how borrowing has quietly become a way of life in India. “Walk into any showroom today — whether it’s for cars, phones, or even furniture — and one thing stands out. Nobody’s paying in full anymore,” he wrote.

He noted that around 70% of iPhones and 80% of cars in India are bought on EMIs, reflecting how debt has become “a habit, not a financial plan.”

“The same system of loans that built fortunes for a few has also pulled countless others into financial stress,” Kaushik wrote. “The difference isn’t the loan itself — it’s the intent and awareness behind it. Some people use credit strategically. Most use it emotionally.”

When loans create obligations, not assets

Citing Robert Kiyosaki’s teachings from Rich Dad Poor Dad, Kaushik explained that while leverage can help create wealth, it requires deep understanding, risk tolerance, and backup plans — something most middle-class borrowers lack.
“For many Indians, loans don’t create assets — they create obligations,” he cautioned. “The car, the phone, the lifestyle — all lose value faster than the loan gets repaid.”

He defined a “good loan” as one that serves a real purpose — such as funding education, buying a home within one’s means, or supporting a business with strong cash flow. “A loan might buy you time,” Kaushik added, “but it always rents your future.”

India’s rising personal debt problem

India’s retail credit segment has been expanding at a pace of over 20% annually, driven by personal loans, credit cards, and consumer durable financing. Economists warn that the rapid rise in unsecured lending — much of it for discretionary spending — could lead to higher default risks if job markets weaken or interest rates rise further.

Kaushik summed up the concern succinctly: “We’ve normalised borrowing as a symbol of status, not necessity. Every EMI feels light until another one gets added. Debt doesn’t look dangerous — until you realise it’s eating your tomorrow to fund your today.”

A caution for India’s new investors

Market analysts say the borrow-to-invest trend reflects a shift in mindset among India’s young investors, many of whom entered the markets after 2020. With small-cap and mid-cap stocks delivering outsized gains, some are tempted to amplify returns using borrowed capital — unaware of the risks.
Financial planners warn that using loans to invest in equities can backfire during market corrections, leaving borrowers with both losses and debt obligations.

Advice for investors

“Before signing any loan form, ask one question — Will this purchase make me financially stronger, or just make me look like it?”

The viral post, while simple in tone, has become a wake-up call for India’s aspirational class — a reminder that real wealth isn’t built on borrowed confidence, but on financial control, discipline, and independence.