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For 15K investment I have a return of 100K.

Congratulations. Which stock? ;)

Such investments are hard to come by and they entail risk. Having debt plus stocks means you are effectively on margin. That is, you have borrowed to buy stocks. Some amount of margin is fine at a market bottom. But mortgaging or having a mortgage to buy stocks is not always good policy.

I would rather own a home free and clear (which I do) and use the savings accruing from not paying rent for investment. If I choose to go on margin, I want to do it at the level of the brokerage, not the mortgage holder, so I can see at a glance how much margin I am using.

Of course, if you have enough house to itemize interest and property tax on 1040, this advice may not hold. If you own 90% of the equity in your house, this advice may not hold. So sure, there are exceptions, as is the case with most rules.

I'm looking at the more general case of the dude with an expensive house and a long-term mortgage, and suggesting that he/she take a serious look before leaping into a volatile security.


PS: Nor am I suggesting that everyone should own a home. My suggestion was predicated on owning a home. If you do, you've got an investment in property which needs to be factored in to your overall investment strategy. If you don't, my suggestion does not apply. (OTOH, the fact that you HAVE to pay rent should also be factored in to your investment plan.)
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