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Author: obe1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121216  
Subject: Hm.EquityLn.Reinvestment Date: 10/13/1997 4:44 PM
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<< 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
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Author: rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 505 of 121216
Subject: Re: Hm.EquityLn.Reinvestment Date: 10/14/1997 9:24 AM
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<< 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.



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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 511 of 121216
Subject: Re: Hm.EquityLn.Reinvestment Date: 10/15/1997 10:50 AM
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<< 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 Taxes
Roy

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