We have a goal of one day doing a large home renovation. This work is not urgent, but it would definitely be nice to do someday. I would prefer to take on as little debt as possible to do this, so I'm happy to save for several years to be able to pay without debt (or with a very small amount of debt).
I've been investing some money in stocks and bonds to eventually pay for this project. The hope is that steady contributions combined with capital appreciation, dividends and interest payments will help me get there faster than a high-yield savings account. Again, the project isn't urgent, so I can afford to wait or endure some market turbulence.
Most of my experience in investing has been saving for retirement, where you have decades to grow your money and you simply continuously save - never withdrawing until you reach retirement age, and then withdrawing only a tiny percentage per year after that. This is a little different, because the money will be used in just a few years. I feel a bit weird just emptying the brokerage account once I reach my goal, and giving up all that future appreciation. It would be nice to let my investments continue to grow.
So one idea I have is this: once I've reached my investment goal, get a home equity loan or HELOC to fund the renovation project. Then, each month, withdraw the amount I need to make that month's payment from my brokerage account and apply it towards the HELOC. I would make both principal and interest payments, even during the interest-only period. I would set a target savings goal so that a 4% annual withdrawal would cover all the loan payments.
This way, my investments keep appreciating and earning money, and once the project is paid off, I'll still have a substantial brokerage account. (NOTE: The amount of money required to make the HELOC payment would not stretch my budget - I wouldn't be depending on the earnings. If I couldn't withdraw from my brokerage for some reason, I would be a little sad that my plan wasn't working but it would not be a budget crisis and I would be able to pay out of my normal income).
One obvious downside is that I'm still paying interest the whole time, even if it's paid out of investment earnings. I'm also exposed to the possibility of rising interest rates making my HELOC more expensive. In general, the historic growth rate from the stock market is going to exceed the interest rate I pay on a HELOC (it certainly has for all my adult life). If something goes drastically wrong and interest rates skyrocket, I could always re-evaluate - maybe I would have to give up on the plan and simply apply the entire brokerage balance as a lump sum to address this situation. I can also reduce my interest rate risk by getting a fixed-rate home equity loan; the downside is I'd have to be very precise about the project budget.
Is this a reasonable plan? Are there downsides I'm missing?