I have seen broad advice against 401k loans. I question this. Why shouldn't I consider a 401k loan to myself within my bond allocation?
Assuming I have trust in my employment cash flow and taxable assets to be able to cover loan payback should I leave my job, is there any reason to not allocate a portion of my age-appropriate bond allocation to a 401k loan to myself? I'm supposed to have 30-40% bonds at my age. So how about a loan of 5-10% of bond allocation, or 1.5-4% of my total invested assets to myself?
In an abstract sense, I can assess my creditworthiness better than I can that of some writer of commercial paper.
On the loan side, I kind of don't care what I'd use this for. I don't buy "opportunity cost" as material (but convince me if I am wrong) if the amount my investor-hat loans to my daily-life hat is as an investment, limited by bond allocation.
Wearing my daily-life hat I would have to decide if a loan for consumption (say a vacation; I could have bang-up trip for 2% of net worth) would be worth it, and the payback cash flow impact acceptable. My investor-hat shouldn't care at all.
EDITED: Is this clarifying? The internet suggests at my age I should be 60/40 stocks/bonds. I am trying to choose a bond investment.
Oh, it looks like my 401k can loan $5000 to an individual at 4%. I have information to believe this individual is as safe a risk as the United States Government. 4% is a better return than a Series EE bond.
Why shouldn't I have my 401k loan the $5000 to the individual as part of my bond allocation?
For this decision, I don't believe I care what the individual is going to do with the money; it happens this individual is me.
What is wrong with this reasoning?