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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Re: Reinvesting 401k Loans Date: 7/30/2010 5:06 PM
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... If so, you could take a $50,000 loan at say 5% from your 401k, then invest the proceeds....

I do not see where you would really gain anything.

If you have $100K in both a 401K and a taxable stock account you would have $200K invested. If you do this $50K loan, then you would still have a total of $200K invested ($50K in 401K and $150K in taxable) Any gains in the taxable account would be taxed and the interest repaid into the 401K will(on average) be less than the $50K would have earned if it was left invested in some sort of balanced mutual fund.

Not that it is a good idea, but you need to compare this to just buying on margin in your taxable account. If you were in the same situation and invested $50K on margin in the taxable account, then you would have $250K invested($100K in 401k, $150K in taxable).

Greg
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