All-in Balance Sheet Allocation

[PatrickA5]

Back in 2000, I had several friends that took out loans against their houses to day trade. Everybody was making big money day trading at the time. They tried to talk me into it, but I knew DW would kill me. One friend lost a ton in the market and then added about 10 additional years to pay off his mortgage.

[VanWinkle]

From Peter Lazaroff:

"Make contributions to your company’s retirement plan up to the level at which your employer matches.

Pay down debts with high interest rates relative to your expected return on investing that are not tax deductible.

Make the maximum contributions to investment accounts that are tax-advantaged such as a 401(k) and IRA.

Pay down debt in which you are paying private mortgage insurance.

Pay down debt with high interest rates relative to your expected return on investing and is tax deductible.

Make investments in accounts with no tax benefits that are expected to earn returns greater than the interest rate on remaining outstanding debt.

Pay down debt with reasonable interest rates (3% – 4%) and that is tax-deductible."

[mrfeh]

Quote:

Originally Posted by VanWinkle Borrowing from your home to invest is the same as taking out a Margin loan to invest, although it may have a better interest rate. I would never do that!! Keep your investing and your house separate- one is a home, the other is an investment.

+1

OP - I suggest you start here: https://www.bogleheads.org/wiki/Bogl...g_start-up_kit

[pb4uski]

While I wouldn't do cash out refinance solely to raise money to invest, if I was refinancing for lower rate or other reasons and could take out some cash and invest it I might do it.... especially if I had job security, my mortgage was affordable and if it went sideways it would not be financial ruin.

That said, given the short term prospects for equities I'm not sure if I would do it right now.

[CRLLS]

I am in the "home is a place to live" camp. However, home ownership is an investment in your future. It limits your housing rate of inflation, making future housing costs less percent of your total expenses. A cash-out refi is an immediate step up on that part of your expenses. I would continue to maximize your investing as you are doing. Without any other info, I would favor finding more ways to LBYM and invest that money into the market in a dollar-cost-averaging manner, especially in this market.

[FREE866]

Quote:

Originally Posted by pb4uski That said, given the short term prospects for equities I'm not sure if I would do it right now.

This has been the sentiment for as long as I've been investing.

[CardsFan]

Quote:

Originally Posted by pb4uski That said, given the short term prospects for equities I'm not sure if I would do it right now.

So you are a d@mn market timer.

Just kidding. I think you are correct.

I am a fan of taking out a mortgage, paying down over time, and then enjoying the feeling of not having a mortgage payment.

Nothing wrong with taking a mortgage into retirement, if you have planned for it.

OP is young, with plenty of time to accumulate funds for retirement and pay down the mortgage.