Re: refinancing advice

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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