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Save on operating interest or invest in mutual funds?
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Kooiker
Posted 1/28/2024 14:00 (#10597622 - in reply to #10597195)
Subject: RE: Save on operating interest or invest in mutual funds?



BrianFerentz - 1/28/2024 08:31
Kooiker - 1/28/2024 07:59

BrianFerentz - 1/28/2024 01:53
Kooiker - 1/27/2024 23:05

BrianFerentz - 1/27/2024 18:49
Kooiker - 1/27/2024 07:39

BrianFerentz - 1/27/2024 04:52
reformedbanker - 1/26/2024 21:39 I've advanced on LOCs to allow for IRA contributions many times.
Borrowing money to invest it is poor risk management. .




So by that statement, one shouldn't ever borrow money to buy land?

Who said anything about land? The topic was borrowing to buy mutual funds, which is a poor financial play.



When you said "Borrowing money to invest it is poor risk management." I didn't realize that you were specifically talking about mutual funds.


Whether its a poor financial play or not is hard to say.  Over the past 5-10-20-30 years lots of mutual funds have out performed land which is apparently "ok" to borrow money to purchase.

What happens when market tanks 15% in one year? Depleted working capital could spell disaster and the long term trend of market would be of little help. You do you though, as you clearly have it figured out!





You don't believe that land could drop in value 15% in one year?      Lots of guys still have the scars that say you're wrong.

Why you bringing up land? Nothing in this discussion was centered on land. Land is a completely different asset class and was not the focus of this discussion. Using loc funds to buy stocks is dumb. You could find yourself in dire financial straits in the short term. PS we are not talking about land so try to stay on topic.




If your investment takes a 15% haircut it doesn’t matter what asset class it is in, if you have to sell it it’s going to sting a little.  

If you don’t have to sell it and have time on your side, again it doesn’t matter what class of asset it is 

You are assuming that because money is being borrowed on the LOC that the stocks would have to be sold to pay off the LOC.   The LOC is only being used to cover a timeframe until other current assets (grain or livestock, etc) are sold and the LOC is paid off.  

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