Mortgage into retirement?

[newbienyc]

I have about 20K that I want to invest into something. I have my ROTH maxed, HYSA, 401K, Brokerage, Crypto holdings etc.

Can I put down a 20K down payment with a long-term financing provider at a typical mortgage interest rate, and take the 80% financing + principal and purchase index funds and pay off the interest over time? I feel like it would eventually outpace the interest (10-30 years from now) with the compounding interest via S&P 500, the larger base enables that compared to if I just put 20K into the market.

Basically I'm looking for a legit way to get a mortgage but in the stock market instead of buying a physical house, is that crazy? roasts are welcome...

 

[RunningBum]

Mortgage rates are relatively low because the lender puts a lien on your house. If you fail to make your mortgage payments, they can go through the process to foreclose on your house and get something back.

At a brokerage, you can usually get a margin loan, but I think typically if you put $20K into the brokerage account, you are limited to $20K margin. I think margin loans are a little higher rate than mortgages but that's easy enough for you to check. It's very risky if you take the full margin loan, because if your investments drop, they can and often will do a margin call, forcing you to come up with more money by adding more to the account from outside, or selling investments in the account. If you don't respond quickly, they will sell something for you. In either case, you are selling after a drop in the market, which is the worst time for a forced sale.

There are other ways to leverage investments, such as buying options. The risk there is if the investment doesn't go up in a certain amount of time, the option expires with no value, so you've lost that investment. If it does go up though, you make more than by just owning the holding outright. I'm out of my element here so I'm not going to expand on this.

 

[TheWizard]

Yeah it's mostly crazy...

 

[Montecfo]

Pretty crazy yes. I would not.

 

[GrayHare]

You're describing margins and options, both of which are risky and better left until after you have a good amount of experience trading stocks.

 

[LateToFIRE]

You're describing margins and options, both of which are risky and better left until after you have a good amount of experience trading stocks.

+1, and for when you could afford to lose it. Kinda comes under the heading of speculating/gambling, not long-term investing.

 

[pb4uski]

If you want to pay a mortgage type rate then the only way to do that that I know of is a well collateralized loan. The lender is willing to accept a lower interest rate because they have less credit risk because of the overcollateralization of the loan and the real estate collateral is low risk.

What do you have for collateral? Do you have a paid-for house?