You will be paying yourself interest on the 401k loan, so I would suggest that the funds are appreciating at a rate equal to the interest rate. Or perhaps you meant "aren't available [for me to invest in the market] to appreciate [or depreciate] for a while"?And there is a further potential opportunity cost if the amount you could have earned in the market is greater than the interest you are paying yourself (instead of to a different lender).You have to look past the form to the substance.A 401k "loan" is not a loan, nor is the "interest" really interest. Nor, actually is the "payment" really a payment.What is truly going on is that you are taking a withdrawal from your 401K, and then putting that money back in over a period not to excess 5 or 10 years. Plus putting in a small additional amount of after-tax money. It's like an IRA rollover except that instead of having 60 days to put it back in, you are allowed to do it monthly over 5-10 years.That's if you jump through all the hoops, and don't leave your job before you've put it all back. Otherwise, the transaction is recognised for what it really is -- a premature withdrawal. And you get hit with the taxes & penalties of such a withdrawal.The "interest" is not really interest. It's just you moving your own money from your checking account to your 401K account. There is no "growth" involved -- you don't make a profit when you move money from your left pocket to your right pocket.
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