Worth it to take out a mortgage at 2.95% to invest?

[allenace]

Any comments on taking out a mortgage at the 4 yr rate of 2.95 to invest in the stock market? Since you can write off the interest you effectively are paying under 2% after writing off interest. If you were to invest in something like a bank stock that pays out a 4% dividend through a DRIP, you would also have the possibility of capital appreciation. After the 4 years, sell of the assets to cover what's left of the loan. Even at marginal return, a $250,000 loan would pay out $10,000/year in dividends. After the taxes, you still would make a decent penny. Any thoughts would be appreciated.

[Brightside]

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[Jungle]

We just locked in our investment loan at 2.79% for 3 years. Dividend yield is just over 4% and stocks have appreciated so far. Last year, 11/13 stocks increased dividend. We started in 2010 and added some positions/stocks along the way, especially during the dips over the last 6 months.

We re-invest the dividends when possible. A bit is left over as cash.

The only thing that sucks is the mortgage payment is paid out of our cash flow. The longest amortization the banks will do now is 30 years, so this may make the payment kind of big if you're leveraging 300k.

However be careful, it is easy to go over board when borrowing to invest. Because you are not using your hard earned cash from your pocket, you can lose the sense of spending responsibility. In the case, it would be called over leveraging. Your amount of comfortable leverage all depends on your financial situation, risk tolerance and experience in investing.

I would not suggest using leverage if you have no experience or knowledge in stock investing. Reason being is that your stocks can sometimes fall well in the negative, post losses, companies can turn and have financial difficulty, etc. It can be very difficult-especially when we humans are irrational, emotional and often buy/sell at the wrong times.

[ksgill]

Any comments on taking out a mortgage at the 4 yr rate of 2.95 to invest in the stock market? Since you can write off the interest you effectively are paying under 2% after writing off interest. If you were to invest in something like a bank stock that pays out a 4% dividend through a DRIP, you would also have the possibility of capital appreciation. After the 4 years, sell of the assets to cover what's left of the loan. Even at marginal return, a $250,000 loan would pay out $10,000/year in dividends. After the taxes, you still would make a decent penny. Any thoughts would be appreciated.

I strongly recommend getting a cash advance from your credit card and invest in gold. It is supposed to double over the next two years. Taking loan from Harold the Jewellery buyer is an even better strategy.

Once you lose the money, your lenders will squeeze your head like a pimple' as Kevin O'Leary would put it. FAIL!

[charliebrown]

I strongly recommend getting a cash advance from your credit card and invest in gold. It is supposed to double over the next two years. Taking loan from Harold the Jewellery buyer is an even better strategy.

Once you lose the money, your lenders will squeeze your head like a pimple' as Kevin O'Leary would put it. FAIL!

Well, there is the MBNA 0% card for 15 mths

[Wing Nut]

If you have the right situation, ths is a great time to leverage. I have a list of qualifications I use to determine if my clients are candidates. I'll share it by email if you want to PM me. Leveraging gets a lot of hate but it has merit in the right situation.