LOC of Mutual Fund and Net Worth Calculation

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  • Dec 5th, 2020 10:14 am
Jun 10, 2019
8 posts

LOC of Mutual Fund and Net Worth Calculation

Hello All,

I am planning my next financial year and wanted to get your inputs if any of my assumptions or calculations are wrong. Please also let me know if something is missing. I have $100,000 in a mutual fund with the ticket symbole TDB422. Year-over-year growth of TDB422 is as follows, and I am assuming that the average from the last 5 years will be applied for the next year.

I have a line of credit with 3.95% interest. I am making four comparisons where either $20,000 or $1,000 is taking out from either the LOC or the mutual fund.
Year-over-Year Growth.jpg
This analysis is looking at not repaying the amount taken out for one year, the mutual fund grows according to the average 5 year history, and the net worth is calculated only from the LOC and mutual fund amounts. Can anyone spot an error in the comparisons?

It's crazy to see that taking out $20,000 from the LOC instead of the mutual fund will cost $25,078 in net worth calculation. Somebody please correct me.
4 replies
Deal Addict
Jun 14, 2018
1367 posts
What's so surprising about your finding? Paying off your LOC only gives you a "return" of 3.95%. Keeping that money invested in a mutual fund gives you a return of 20%+ (hypothetically).
Deal Fanatic
Jul 1, 2007
8569 posts
Why on Earth would a mutual fund that invests exclusively in high tech companies return the same over the next 5 years as it did over the last 5 years?

That's a fund that has enough history that you can look up what it did from 2000 to 2005.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Jun 10, 2019
8 posts
You are correct! Over the past 10 years, TDB422 has appreciated an averaged 25% per year. Thank you for making me notice this!
User avatar
Dec 28, 2010
361 posts
What is this?

Your financial planning 101 homework?
mysticalinfluence wrote: Brah do you make 100K year too and wear Canada Goose? You might not be fat but your fattest douche bag on RFD.
kenchau66 wrote: you mean "you're"


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