Finance Dave
Thinks s/he gets paid by the post
- Joined
- Mar 29, 2007
- Messages
- 1,864
"Obviously there are interest costs (expected to be offset by gains upon market return to mean, and a risk of compounding SORR if there were multiple years of declines that required a larger withdrawal to pay the HELOC at even further depressed market prices."
This line of thinking worries me. HELOC rates are variable, and if you take a large loan and rates go up, you will be in trouble. Even if they don't, the "risk equivalent" rate you earn on your investments will never be as high as the rate you're paying on your HELOC. You seem to have taken the false pretence that market returns will always outpace the HELOC rate.
This line of thinking worries me. HELOC rates are variable, and if you take a large loan and rates go up, you will be in trouble. Even if they don't, the "risk equivalent" rate you earn on your investments will never be as high as the rate you're paying on your HELOC. You seem to have taken the false pretence that market returns will always outpace the HELOC rate.
