Originally Posted by linus
That's where we differ in our interpretation of the situation. What you're essentially advocating is a borrow and invest strategy. You've used "risk" as your uncontrolled variable in all of this. I fail to see how adding risk is not subject to market conditions. There is a variable called Market Beta. I'd love to know where you can get a virtually risk-free 7% rate of return. Please do advise... I'm sure many people would love to achieve these sorts of returns with no risk.
The arguments I've posted above are actually rather simple and quite basic. And for someone who's looking to invest money by borrowing money, I find your comment about "big words" to be quite arrogant.
And, not that it matters, but I have a Masters degree specializing in finance, a Chartered Financial Analyst designation and have been working in investment management for over a decade. Not that it matters...
I didn't mean it to be offensive and I apologize as you have obviously taken offense. In the short term, something like the stock market is very risky. However, taken over the long term (say 10 years) the risk drops dramatically. Someone who is on a fixed income retirement may make a smart decision and rely on lower yield guaranteed income investments that in most cases are lower than the finance rates available, but again I was referring to the average buyer.
Currently 7% is hard to come by with the recent fed actions, unless you have an existing relationship w/ a weath management group or something similar, but 5.9% is still pretty easy to get at most credit unions here in the states.
I said "not that it matters" as most of this stuff is pretty simple math and I didn't need a degree to learn any of this, I wasn't being arrogant. At least not on purpose.