Home Equity Loan
Does it make financial sense at 50+ to borrow from an equity line to help fully fund your 401K?
The interest on the equity line is tax-deductible. At 50+, you can fund $20,500 for this year.
Public Comments
- Wow, that's a complicated question! It would depend on several factors including your tax bracket, how the funds will be invested, the interest rate and term on the loan, etc. To truly be effective, you would need to earn more on the 401(k) investment than your tax equivalent interest on the home equity loan. I would not recommend this. The biggest reason, among others, is the risk involved. Unless you invest in something that is 100% guaranteed (money market accounts, CD's, etc.) then you are potentially risking both your retirement savings and the equity in your home. It could also be illegal to borrow your home equity to invest in securities (or at the very least, something your lender would frown upon.) I would recommend meeting with a reputable financial planner and tax advisor that can consider all of your specific personal financial information and make a suitable recommendation to meet your retirement goals.
- this is not quite legal - kind of like not quite pg -- any way not knowing all of you tax info i would strongly advise you to set down with your tax man and discuss how it will really effect you taxes and also how you are going about to borrow money to invest in the market and the risk of losing both you equity in you home and the market if everything really went south!!! nice pitch but no ringer!!!
