4 ms·
Rule 7 (don't use leverage) really needs some additional clarification. If you're borrowing money using a mortgage in order to invest in stocks, that's probabl
by gnfargbl 3y ago
Rule 7 (don't use leverage) really needs some additional clarification.
If you're borrowing money using a mortgage in order to invest in stocks, that's probably not particularly smart. If you're taking on debt financing to grow an already-profitable business into an even more profitable business, that might be a different kettle of fish.
- stouset 3y ago> If you're borrowing money using a mortgage in order to invest in stocks, that's probably not particularly smart. If you have both a mortgage and investments, that is almost literally exactly what you’re doing. If your mortgage is below a 4% rate, this is almost certainly a great idea. If it’s above that, it may be a reasonable approach (up to a point). I have a mortgage at 2.375% and I can assure you I intend to pay it off over the full 30 year duration. Every early payment is an enormous opportunity cost compared to leaving it in the markets over the remaining duration.
- colonwqbang 3y agoWhy would an investment into your own business be less risky than a diverse investment in the general market? It doesn't make sense. Anyone who has both loans and stocks is "borrowing to invest in stocks". Because they are investing money that could be used towards paying off their loans. As long as the risk is carefully considered (not too high % loans etc) why not do it?
- OJFord 3y agoI might not re-mortgage in order to raise capital to invest, but if the interest rate is low (i.e. not right now) why would you put up more of a deposit than you have to? It's a cheap loan for however many years, and if it rises you can just put up more then, having benefited in the meantime.