1

What are some ways to determine if taking on debt is worth it?

For instance, what types of calculations exist for seeing if it's worth it to take on mortgage debt?

1
  • 1
    For mortgages specifically, see this question. Aside from that, the general answer is that it depends on the rate of return you'll get on whatever you do with the borrowed money, vs. what you'd get without borrowing money. – BrenBarn May 11 '14 at 17:31
2

If the risk adjusted return is greater than the cost, it may be worth it.

Even this statement is a slippery slope. In theory, one's tax adjusted mortgage might be costing 3%, and the market (as measured by the S&P) average is closer to 10%. Yet, when risk adjusted, it's not a slam-dunk to simply keep a mortgage, or take on a new one for the purpose of investing.

Your second question appears to be a buy-vs-rent (or perhaps 'save to buy with no mortgage') question. That question has been answered multiple times on Money.SE in its many variations.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.