Comments on: With Rates This Low, Should You be Borrowing to Invest? http://www.darwinsfinance.com/borrow-to-invest/ Financial Evolution: Education, Adaptation, Achievement Mon, 06 Feb 2012 15:43:23 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Udayan Chattopadhyayhttp://www.darwinsfinance.com/borrow-to-invest/#comment-8466 Udayan Chattopadhyay Fri, 20 May 2011 11:45:16 +0000 http://www.darwinsfinance.com/?p=2447#comment-8466 I agree with the general consensus that this can probably work in theory, however most of us do not have enough stashed away that we can quit our day jobs and monitor the markets all day. I agree with the general consensus that this can probably work in theory, however most of us do not have enough stashed away that we can quit our day jobs and monitor the markets all day.

]]> By: FICA Tax Rates 2011 – How They Work and Why They Matter | Jackpot Investorhttp://www.darwinsfinance.com/borrow-to-invest/#comment-8196 FICA Tax Rates 2011 – How They Work and Why They Matter | Jackpot Investor Thu, 03 Mar 2011 23:58:34 +0000 http://www.darwinsfinance.com/?p=2447#comment-8196 [...] Mine is $4.9 Million – Or Is It?Social Security Tipping Point in 2010 – IN THE REDWith Rates This Low, Should You be Borrowing to Invest?The SEC Likes Porn in the Office – Share Your Ridiculous Work StoriesFICA Tax Rates 2011 [...] [...] Mine is $4.9 Million – Or Is It?Social Security Tipping Point in 2010 – IN THE REDWith Rates This Low, Should You be Borrowing to Invest?The SEC Likes Porn in the Office – Share Your Ridiculous Work StoriesFICA Tax Rates 2011 [...]

]]> By: Roger Wohlnerhttp://www.darwinsfinance.com/borrow-to-invest/#comment-6615 Roger Wohlner Tue, 10 Aug 2010 23:46:52 +0000 http://www.darwinsfinance.com/?p=2447#comment-6615 I recall reading this WSJ article also and shaking my head. From a pure mathematical perspective one might be able to make a mental case for borrowing on your home or from your 401(k) to invest. In reality, as you pointed out, much can go wrong especially for the casual investor. Not the least of which is being right with your investment choices but wrong on the timing. I'm not against leverage but this is not where I would recommend using it. I recall reading this WSJ article also and shaking my head. From a pure mathematical perspective one might be able to make a mental case for borrowing on your home or from your 401(k) to invest. In reality, as you pointed out, much can go wrong especially for the casual investor. Not the least of which is being right with your investment choices but wrong on the timing. I’m not against leverage but this is not where I would recommend using it.

]]> By: anonymoushttp://www.darwinsfinance.com/borrow-to-invest/#comment-6332 anonymous Fri, 02 Jul 2010 18:26:46 +0000 http://www.darwinsfinance.com/?p=2447#comment-6332 What about taking on debt to invest in hard assets like precious metals? With the world's governments taking on more debt, it seems like precious metals can be seen as a currency/inflation/defense play that could pay off easily and stay ahead of loan interest rates. I am not thinking about putting nest egg at risk but investment money. What about taking on debt to invest in hard assets like precious metals?

With the world’s governments taking on more debt, it seems like precious metals can be seen as a currency/inflation/defense play that could pay off easily and stay ahead of loan interest rates.

I am not thinking about putting nest egg at risk but investment money.

]]> By: Multiple Egg Basketshttp://www.darwinsfinance.com/borrow-to-invest/#comment-6314 Multiple Egg Baskets Wed, 30 Jun 2010 01:43:44 +0000 http://www.darwinsfinance.com/?p=2447#comment-6314 The thought of leveraging your line of credit to purchase stock is an interesting idea. Could BP be an option if you're speculating on a 2 year trend? What about Potash and the global need for increased food production? This strategy requires a lot of discipline and a solid understanding of your accounts payable. Being over leveraged could work against you if you're in a life change position such as wanting to buy a new home or even if you're expected to start paying for secondary school expenses. Do your homework and don't just start blindly investing your 'borrowed' money. The thought of leveraging your line of credit to purchase stock is an interesting idea. Could BP be an option if you’re speculating on a 2 year trend? What about Potash and the global need for increased food production?

This strategy requires a lot of discipline and a solid understanding of your accounts payable. Being over leveraged could work against you if you’re in a life change position such as wanting to buy a new home or even if you’re expected to start paying for secondary school expenses.

Do your homework and don’t just start blindly investing your ‘borrowed’ money.

]]> By: Financial bondagehttp://www.darwinsfinance.com/borrow-to-invest/#comment-6302 Financial bondage Mon, 28 Jun 2010 18:09:11 +0000 http://www.darwinsfinance.com/?p=2447#comment-6302 never borrow money to invest it. bad idea never borrow money to invest it. bad idea

]]> By: Darwinhttp://www.darwinsfinance.com/borrow-to-invest/#comment-6297 Darwin Sat, 26 Jun 2010 01:31:46 +0000 http://www.darwinsfinance.com/?p=2447#comment-6297 <a href="#comment-6295" rel="nofollow">@M&M</a>, Hah, I bet you thought you had me there! Actually, perhaps I didn't make it clear enough in the article, but when you're going to short something, you do need a margin account, but that doesn't mean I'm "borrowing on margin". It just means that it has to be enabled in the event they need it, or if you're going "into margin", then you pay. Here's the example where I would have been borrowing on margin and probably at say, 7% or something: - If I had 50K cash to fund an account and went long 70K in stock. I would have had to borrow 20K on margin. Here's why my account history shows no margin costs (I'm not borrowing any money): - Go long ~50K stock and ~30K leveraged ETFs. It's a net 20K long position and would only trigger margin costs if one particular ETF went parabolic, which doesn't concern my since I have opposing pairs. So, in summary, it was a good thought, and many investors DO use margin to invest, but I'm not borrowing on margin to invest. It's only "enabled" in order to allow me to do what I'm doing. @M&M, Hah, I bet you thought you had me there! Actually, perhaps I didn’t make it clear enough in the article, but when you’re going to short something, you do need a margin account, but that doesn’t mean I’m “borrowing on margin”. It just means that it has to be enabled in the event they need it, or if you’re going “into margin”, then you pay. Here’s the example where I would have been borrowing on margin and probably at say, 7% or something:
- If I had 50K cash to fund an account and went long 70K in stock. I would have had to borrow 20K on margin.
Here’s why my account history shows no margin costs (I’m not borrowing any money):
- Go long ~50K stock and ~30K leveraged ETFs. It’s a net 20K long position and would only trigger margin costs if one particular ETF went parabolic, which doesn’t concern my since I have opposing pairs.

So, in summary, it was a good thought, and many investors DO use margin to invest, but I’m not borrowing on margin to invest. It’s only “enabled” in order to allow me to do what I’m doing.

]]> By: M&Mhttp://www.darwinsfinance.com/borrow-to-invest/#comment-6295 M&M Fri, 25 Jun 2010 19:12:07 +0000 http://www.darwinsfinance.com/?p=2447#comment-6295 What is you invested in your short strategy of leveraged ETFs with the borrowed money?? What is you invested in your short strategy of leveraged ETFs with the borrowed money??

]]> By: The Simple Dollar Weekly Roundup: Interesting Reader Emails Edition | Frugal Living Newshttp://www.darwinsfinance.com/borrow-to-invest/#comment-6290 The Simple Dollar Weekly Roundup: Interesting Reader Emails Edition | Frugal Living News Thu, 24 Jun 2010 07:42:45 +0000 http://www.darwinsfinance.com/?p=2447#comment-6290 [...] With Rates This Low, Should You be Borrowing to Invest? I agree with his answer. I’d add that it’s all about the risk, and when you take on debt to invest in the stock market, you take on multiple layers of risk. I don’t think that’s a healthy situation for Joe Average who dreams of being an investor. (@ darwin’s finance) [...] [...] With Rates This Low, Should You be Borrowing to Invest? I agree with his answer. I’d add that it’s all about the risk, and when you take on debt to invest in the stock market, you take on multiple layers of risk. I don’t think that’s a healthy situation for Joe Average who dreams of being an investor. (@ darwin’s finance) [...]

]]> By: Money Reasonshttp://www.darwinsfinance.com/borrow-to-invest/#comment-6289 Money Reasons Thu, 24 Jun 2010 01:05:27 +0000 http://www.darwinsfinance.com/?p=2447#comment-6289 I played around with the idea of taking a loan against my 401k and house to invest. But then chickened out knowing that such actions would be pretty reckless to do so. It was a good thing too, because shortly there after, we went into the "Great Recession"!!! I played around with the idea of taking a loan against my 401k and house to invest. But then chickened out knowing that such actions would be pretty reckless to do so.

It was a good thing too, because shortly there after, we went into the “Great Recession”!!!

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