Go to Jeff Salisbury LWGate Home Page.From: "Ken Meinken" <kmeinken@bigfoot.com>
Subject: Re: refinancing advice
Date: Fri, 7 Aug 1998 23:46:40 -4
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> From: jack law <jlaw@pop.kis.net> > My question is should a refinance ( at around 7%) at a thirty-year > mortgage and invests the cash (approximately $40,000) in a mutual fund. ... > What am I missing? Please advise on whether we should refinance. Well, the most obvious thing that you are missing is the possibility that your investments will drop. Have you considered the possibility that the current "correction" will lose an additional 40%? Basically, you are thinking of borrowing money to invest in the stock market. That's risky, ESPECIALLY with the market as high as it is. There are plenty of opportunities out there that could turn this into a full fledged bear market. The market is nervous and it could break down in a hurry....or slowly, bit by bit. Will the market drop 40% more? I don't know. But based on history, it certainly could. Also don't forget that the "tax writeoff" only recovers a portion of the money you are "giving away" to the bank. Ken - -
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