<< Motley Fool, Generally speaking can there be money made by taking out a home equity loan and reinvesting it in the stock market? Taking into consideration all the costs for the loan,interest,tax implications/advantages,inflation and the current stock market returns. Loan $10,000 Interest rate 8.99% 60 month loan $50 PREPAY FEE No Appraisal Fee $50 Process fee Tax deduction for home equity loan ???? Tax paid on capital gains ???? % of return expected annually 15%-20% Is this an UNfoolish thought? Mike
<< Q: ... taking out a home equity loan and reinvesting it in the stock market? >>Andrew Tobias has a very comprehensive answer for this question. "NO."Instead, take the money that you would have been paying for the monthly loan payment, and invest that.
<< Generally speaking can there be money made by taking out a home equity loan and reinvesting it in the stock market? >>Certainly NOT a Foolish recommendation. You may not be old enough to recall the last BEAR market. Consider your position if you were to take an equity loan, invest in shares that decline in value. This could jepordize your home!!! It would seem that the risk would far outweigh the reward.As was pointed out a few posts back, another way (and a better way, IMHO) is to compute what your monthly payment would be on your home equity loan, and invest those funds. Then, you home would not be at risk, and your investing funds would grow year after year.TMF TaxesRoy
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