Date: Sun, 9 Oct 2005 16:43:56 -0500
From: revheck@linuxwaves.com
Newsgroups: misc.invest.financial-plan
Subject: Re: Borrow to fully fund retirement accounts?
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	=UwMJ


Paul Michael Brown wrote:

> 1. Time Horizon. The poster and his wife are 45/46 years old. If they
> intend to retire "early" they might have only 10 years to make this work.

We won't retire for 20 years.

>
> 2. Interest Rate Risk. I would definitely be leery of any type of variable
> rate mortage, HELOC, or whatever. Google Stephen Roach's latest prediction
>

Has there ever been a 20 year period where stock market did not beat
prime
rate?

>
> 3. Taxes. You're correct to consider the after-tax cost of the borrowed
> money secured by a mortgage. But don't forget that withdrawals from the
> retirement account will be taxed at ordinary income.

You win if you are in a lower bracket at retirement. But even
if you are in same bracket, ROI would be positive as long
as long-term stock market beats averaged prime rate.


> Finally, consider that a long term capital gain on the
> house gets a $500K exemption and a favorable rate after that.

You still get the gain on the house. I don't see how this changes
anything.

> Call me old fashioned, but I like the idea of heading into retirement with
> a paid-for house.

I like the idea of having more total funds+equity at retirement.