bad idea or good one?

[jazz4cash]

Bad idea. I think your calculation is off by the cost of the mortgage. If your investment is earning 10%, but the mortgage costs 6%, your retirement account is only growing by 4% per year, so it will take much longer than 21 yrs (or much much higher investment return) to get to 1 mil.

[Lazarus]

Do not borrow money to invest! It has worked for some and failed for others. The others are probably not posting here.

If you are willing to lose your house go right ahead. Thats the chance you are taking.

[kcowan]

Quote:

Originally Posted by jazz4cash Bad idea. I think your calculation is off by the cost of the mortgage. If your investment is earning 10%, but the mortgage costs 6%, your retirement account is only growing by 4% per year, so it will take much longer than 21 yrs (or much much higher investment return) to get to 1 mil.

Most of that 4% is before taxes too (except IRA/401K).

BTW make sure to ask the advisor how big his mortgage is, what is the value of his house, and how big his portfolio is. Maybe ask whether his Mercedes is leased or purchased!

[ddeennis]

Quote:

Originally Posted by heyyou Your easy money plan sounds greedy to me. You are looking for a short cut to wealth. Your idea is not a new one. Short cuts seem to work best on paper. In real life, you only hear about the winners. Often the markets forget to cooperate with someone's plans. In the early eighties, I lost $60,000 (two years gross wages) in limited partnership land investments. Calculate the compounding on that for 35 years. My suggestion is to start saving aggressively. In 21 or 25 years, you will be so used to living frugally, that you will need less for retirement than your spendthrift co-workers. That method works because there is less risk due to less leverage. If the market dumps, you still have more than the next guy. There are an enormous amout of very bright people trying to get rich in the markets, and a very few do, but at the expense of all of the other ones. At age 41, you have seen someone take a new position and say, "I'm going to show them how to do this job" then fail due to lack of experience. Your proposal is similar. You intend to get rich due to your plan. Where is the experience, hard work, and sacrifice that the successful people use to get there? Joe

im not being greedy im just trying use what have to work for me and the sooner i act the better my chances are to make a little more money.

i live fugally now as it is, i have no car payments at all and i have no debt to anyone except a small balance on 2 credit cards just to keep something active on my credit report for which the balances are under 20% of total credit limit.

when working on paper i could double my money every 7 years at 10% and compare that to just starting out with just 1500 a month, it just seem to make more sense to start off with the bigger chunck of money

everyone im sure has done the numbers on paper and then try to decided from there what to do.............i did the same i started out on paper and thought of as many ways a possible to generate more money for retirement.

and so i jumped in and started to do research and look at the different ideas i had, so i asked q's like here on this board to help along my quest to find some answers.

the way i saw it was using my house for a lump some investment of 125,000 to get an account rolling had the potential of making 1 million in 21 years at 10% return. therefore that millions bucks would cost me about 1000 bucks a month.

but if i was to start out with smalller payments to reach the goal of 1 million bucks it would take many thousands of dollars each month to reach the goal for the next 21 years.

so it would be cheaper for me to use my house plus i can deduct my interest and i would have it paid off by the time i retire anyway.

and even if i lost the house so to speak i still have my money in the market and i could just walk away from the house and owe nothing ( which i wouldnt do anyway)

i dont see what the big deal is anyway wether the housing market tanked or not the end result is i would have more cash at retirement then doing nothing at all. even by the time i retire what different does it make if i my house is worth less or more in 21 years it would be paid off. and the botton line is i would have spent more money every month making payment to and investment to reach the same goal.

which would be worse

paying 1000 bucks each month on my house payment for which i invest the money to the market that tanked and now my 125000 invest is worth 90000 when i retire.

or pay 3000 a month and come to find out my invest ment is only worth 90000 at retirement.

all of this was in the attempt to reach a goal.

or em i just missing everything in all this?

[RetireeRobert]

Quote:

Originally Posted by ddeennis im not being greedy .............. when working on paper i could double my money every 7 years at 10% and compare that to just starting out with just 1500 a month, it just seem to make more sense to start off with the bigger chunck of money..........

Try this on paper----you can double your money in a mere 3 years if you make 30% a year. Why not do that?

[Alan]

ddeenis,

You say you can now afford 1,500/month and your house is worth 125,000.

I was in a similar situation 8 years and decided to simply invest the money I was putting into a mortgage.

Some very simple rough math, $18000/year at 8%/year will give you a nest eagg of $1M at age 63 (you are 41 now). If your house appreciates at 4% / year it will be worth $285K - not a bad little haul and much lower risk than borrowing against your house. If things go wrong like losing your job or ill health you can stop investing 1,500/month and not worry having a loan to pay back.

[ddeennis]

Quote:

Originally Posted by RetireeRobert Try this on paper----you can double your money in a mere 3 years if you make 30% a year. Why not do that?

ha ha what a smart ass. 10% is not far reality 30% is. duh

[ddeennis]

Quote:

Originally Posted by Alan ddeenis, You say you can now afford 1,500/month and your house is worth 125,000. I was in a similar situation 8 years and decided to simply invest the money I was putting into a mortgage. Some very simple rough math, $18000/year at 8%/year will give you a nest eagg of $1M at age 63 (you are 41 now). If your house appreciates at 4% / year it will be worth $285K - not a bad little haul and much lower risk than borrowing against your house. If things go wrong like losing your job or ill health you can stop investing 1,500/month and not worry having a loan to pay back.

it looks like i will go the route of using my extra money to get it rolling, im not finding a lot of info from where people have used there house to make more money so i will continue to look at my extra money to invest.

[RetireeRobert]

Quote:

Originally Posted by ddeennis ha ha what a smart ass. 10% is not far reality 30% is. duh

Do you always call names and kick in the shins those who proffer advice YOU asked for?

[ddeennis]

Quote:

Originally Posted by RetireeRobert Do you always call names and kick in the shins those who proffer advice YOU asked for?

only the ones who are jerks. besides it wasnt advice he was just being a jerk i have no problems letting them know about it. those are the folks who just try to stir crap up anysways just like the ones calling me a troll so go beat on there statements and not mine...................

[Martha]

Settle down folks.

[Zipper]

A paid off house is peace of mind.

You and your advisor don't really know what the markets are going to do.

He could end up making more money on your stash than you do.

[RetireeRobert]

Quote:

Originally Posted by ddeennis only the ones who are jerks. besides it wasnt advice he was just being a jerk i have no problems letting them know about it. those are the folks who just try to stir crap up anysways just like the ones calling me a troll so go beat on there statements and not mine...................

So sorry ddennis I offered you the wrong advice. It seems you have taken great offense at my response to your queries, and I sure did not mean to offend. Anyway, you seem to have settled on a course of action in relation to your original questions, so I withdraw my advice, and hope the offense you have taken is short-lived.

Have a good one. :confused:

[Sandy]

ddeennis

It seems your mind was made up before you posted your question. The general consensus has been: proceed with care, your plan is high risk and you could find yourself without a home or investments.

The majority who post here got here the old fashioned way: slow and steady wins the race. It is a lesson you could benefit from, but do not want to hear, while you toss insults to make your ill-conceived argument seem sounder.

In the future, you would be wise to withhold your questions if you do not want to hear the answers.

[donheff]

Quote:

Originally Posted by ddeennis and whats the deal with the comment on the troll, what the hell im just getting advice looking stuff up and trying to open my eyes some since like most folks wait to long to think about retirement. im not here to start crap just the average joe looking for honest answers or opinions ...........gee

I questioned whether you were posting a troll because of your glowing enthusiasm for the advice you expect to get when you find a financial adviser. No one else reacted but around here that is a provocative thought. Unless, of course, you plan to engage FinanceDude - he garnered our trust the old fashioned way, he earned it.

[FinanceDude]

Quote:

Originally Posted by ddeennis ha ha what a smart ass. 10% is not far reality 30% is. duh

He was being facetious..........