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Old 07-23-2012, 05:34 PM   #113
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Well, yes, in this scenario if you are investing at a 6% return and are paying 5% and you are paying the loan out of the investment account you would have 1% per year on a decreasing balance. Not a lot.
My point is the 5% you're garanteed to pay, the 6% return on investment is what I have a problem with.
Are you planning to pay any tax on that 6%?
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Old 07-23-2012, 07:04 PM   #114
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There is lots on that in the good book written long ago:
What Does the Bible Say About Borrowing Money?

I thought it said stay away from money lenders and tax collectors, and all those other scum... and never, ever finance a luxury item, something like that....

Boy, did I ever take a few wrong turns.
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Old 07-23-2012, 07:09 PM   #115
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Old 07-23-2012, 07:38 PM   #116
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Are you planning to pay any tax on that 6%?
Yes, but I understand that the 5% you would pay on the loan is income tax deductible. So I guess your profit is 1% minus income tax, so say .6%...

My point is still I doubt you can maintain 6% ROI over a long period, even as an average???
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Old 07-23-2012, 07:58 PM   #117
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My house AND motorhome are paid for. I'm actually proud I did it that way.
I could get "cash" by borrowing against both homes, I don't need to shell out interest to borrow money I have. It seems counter-productive.
Sure I could get a warm and fuzzy feeling looking at my IRA drop like a rock, but I chose otherwise. And luckily before any real damage happened.
I almost bought a brand new 40 footer with bunks and all the stuff because I could "afford" it. But after realizing the sales and excise tax was going to be around 15000 each year for the first 2 years I said NO WAY. 30K for something you can't even put your hands on. No thanks.
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Old 07-24-2012, 09:52 AM   #118
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Originally Posted by DBeauchamp

Yes, but I understand that the 5% you would pay on the loan is income tax deductible. So I guess your profit is 1% minus income tax, so say .6%...

My point is still I doubt you can maintain 6% ROI over a long period, even as an average???
If your Bank offered you a 10yr "fixed" return (federally guaranteed & insured) of 6-7%...... How many of you would put SOME of your money in this......or would turn your back on this offer and prefer to have ALL your money invested in the markets?
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Old 07-24-2012, 10:00 AM   #119
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I would.
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Old 07-24-2012, 11:26 AM   #120
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I'd borrow money on my MH so I could put it in the bank. Kidding. I'm a pure equity player, no debt instruments, my paltry sums are in RE and stocks. But then, I always did like roller-coasters.... Life's a game, jump in, that's my motto.
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Old 07-24-2012, 11:36 AM   #121
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You mean backed by the full faith and credit of the US Government that borrows 40 cents of dollar it spends? That's very comforting.
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Old 07-24-2012, 11:43 AM   #122
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You could by some of Spain's bonds at 7.5%(backed by the Govt)
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Old 07-24-2012, 11:53 AM   #123
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You could by some of Spain's bonds at 7.5%(backed by the Govt)
I am holding out for Greece.
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Old 07-24-2012, 12:10 PM   #124
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I'd borrow money on my MH so I could put it in the bank.
Would make sense if you could borrow at 2% and put it somewhere that makes 5%.
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Old 07-24-2012, 12:14 PM   #125
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If your Bank offered you a 10yr "fixed" return (federally guaranteed & insured) of 6-7%...... How many of you would put SOME of your money in this?
If I could get a low risk (relatively speaking) 7% return on cash, I wouldn't be working today!

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Old 07-24-2012, 01:18 PM   #126
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Well we did not pay cash! we wrote a bad out of town check
Actually we had the proceeds of a house sale (rental property) that had been sitting in a checking account waiting for the market to stabilize. When in august it was still going down and motorhome sales were in the same toilet we took advantage of the timing and bought our unit outright at a nice discount.
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