Timeline for How to decide where to invest home equity?
Current License: CC BY-SA 4.0
13 events
| when toggle format | what | by | license | comment | |
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| Dec 16, 2019 at 8:07 | comment | added | ssn | If that was a sure thing then all would be great, but it is not. Also keep in mind that when the economy crashes, so does the value of your house (all else equal), potentially leaving you technically insolvent - can you afford being out-of-money both on your house and on your investment? And how long can you continue like that, say if the potential crash last 5+ years? | |
| Dec 15, 2019 at 23:31 | comment | added | DarcyThomas | @ssn The 'Great recession' from a S&P500 pov, lasted about 1.3 years, let's call it 2 years. So even if I bought at the peak before the crash, my back of envelope calculation says I would likely to be ahead after 5 years, and definitely by 10. That being said I have changed my question to 20-30 years as that is a more useful question. | |
| Dec 15, 2019 at 23:26 | comment | added | DarcyThomas | @RonJohn For a rental, well the rent. For stock, well dividends and selling some to make up the difference. The 20k reserve, would probably also be needed, until the (inflation powered) growth in dividend/rent completely comfortably covers the mortgage. I was planning on that, but didn't want to clutter the question. | |
| Dec 15, 2019 at 23:20 | history | edited | DarcyThomas | CC BY-SA 4.0 |
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| Dec 15, 2019 at 17:48 | answer | added | juhist | timeline score: 1 | |
| Dec 15, 2019 at 12:05 | comment | added | Fattie | The critical point here is what SSN says - 10- years is just a swing trade, not "long term". | |
| Dec 15, 2019 at 11:44 | answer | added | JTP - Apologise to Monica♦ | timeline score: 2 | |
| Dec 15, 2019 at 7:08 | comment | added | RonJohn | Isn't a payment due every month on the second mortgage? Where do you get the money to pay it? | |
| Dec 15, 2019 at 6:57 | comment | added | ssn | Keyword: Long term. 5-10 years is not long term; we could face a recession tomorrow - can you live with potentially losing these money; because 5-10 years may not be long enough to regain losses. | |
| Dec 15, 2019 at 6:53 | history | edited | DarcyThomas | CC BY-SA 4.0 |
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| Dec 15, 2019 at 6:48 | comment | added | DarcyThomas | @BrianBorchers Currently where I live the rate on a 2 year loan is about 4% Equity growth averages ~11% and property prices have been going up ~6% (which would be leveraged ~4x) so yeah over the long term yeah I think I would be able to do Ok. Why do you ask? | |
| Dec 15, 2019 at 4:58 | comment | added | Brian Borchers | What kind of interest rate would you pay on the home equity loan? Why are you convinced that you could earn enough from investing that money to cover the interest on the home equity loan? | |
| Dec 15, 2019 at 4:23 | history | asked | DarcyThomas | CC BY-SA 4.0 |