I expect some folks here have thought this through.
A debate exists about the advisability of holding a few years cash to weather down markets ( thereby failing to get returns on those funds in the market)
OR to
Let the money ride and take some lumps when having to sell in a down market - the rationale being that the LT investment benefits outweigh the "cost" of selling in down markets.
Why not use a home equity LOC and tap it in in a down market as necessary for cash.
It seems a more effective approach.
If there is no need to tap the LOC- you incur no costs at all for this right to access funds.
If you tap the LOC it seems you are simply betting that the near term return on the invested funds will exceed the interest rate ( net of taxes) paid for the home equity cash. In a down market this is probably a very good bet.
Note that you don't give up any leverage/ownership on your house.
All gains in its value belong to you- even if a LOC loan is outstanding.
Is there any downside I might be missing?
A debate exists about the advisability of holding a few years cash to weather down markets ( thereby failing to get returns on those funds in the market)
OR to
Let the money ride and take some lumps when having to sell in a down market - the rationale being that the LT investment benefits outweigh the "cost" of selling in down markets.
Why not use a home equity LOC and tap it in in a down market as necessary for cash.
It seems a more effective approach.
If there is no need to tap the LOC- you incur no costs at all for this right to access funds.
If you tap the LOC it seems you are simply betting that the near term return on the invested funds will exceed the interest rate ( net of taxes) paid for the home equity cash. In a down market this is probably a very good bet.
Note that you don't give up any leverage/ownership on your house.
All gains in its value belong to you- even if a LOC loan is outstanding.
Is there any downside I might be missing?