Has anybody taken home equity to invest

[Danmar]

It just occurred to me that many people effectively do just that by using their cash flow for investing rather than paying down the mortgage faster? This probably makes more sense when you are younger as it is riskier?

 

[nun]

I've never thought of the equity in my home as cash I can use. I don't buy on margin, don't invest in leveraged funds, and just pay down the mortgage asap so that I can be totally debt free (DF) when I ER. Then I'll be a DFER (pronounces "duffer").

I'm glad I used some of the gains before 2008 to pay down the mortgage. Now I just have 2 years left before the mortgage is no more and I can ER at 51.

 

[bcinvest]

+ 1 Get out and stay out of debt.

I see no inherent problem with debt. Its all in how you use it. I had no problem taking out a mortgage in '99 to purchase my current home instead of using cash. Mortgage rates were 6.75% when I borrowed. I have averaged 16.7% with the funds and made several times over the value of the money I borrowed. I had the cash to pay off the mortgage at any time and was confident I could do better. Even if I had performed as poorly as the S&P500 I would not have been out much.

I would not hesitate taking a sizable mortgage in this environment to keep my investments intact.

 

[nun]

I see no inherent problem with debt. Its all in how you use it.

I agree, but many can become addicted to debt, or rather the appearance of affluence that it can provide. With rates so low at the moment my aversion to debt has been a bit tempered, but as a general rule I try to avoid it. The mortgage is a case where there's no practical alternative if you want to own a home, however, i often wonder if I would have been better off to rent for the last 20 years rather than paying the costs of home ownership.

 

[Danmar]

I see no inherent problem with debt. Its all in how you use it. I had no problem taking out a mortgage in '99 to purchase my current home instead of using cash. Mortgage rates were 6.75% when I borrowed. I have averaged 16.7% with the funds and made several times over the value of the money I borrowed. I had the cash to pay off the mortgage at any time and was confident I could do better. Even if I had performed as poorly as the S&P500 I would not have been out much.

I would not hesitate taking a sizable mortgage in this environment to keep my investments intact.

If there is a problem with debt it relates to the added financial risk it causes. In most cases things work out pretty well. In other cases the debt becomes a real concern. Glad things have worked out for you. I doubt we will hear of any cases where it hasn't on this forum. I used debt extensively and successfully during my working life but when I retired I also retired the debt.