Arbitrage/good use of cheap debt

[daverobev]

You can still get pretty good rates on personal loans here. Eg, I think I missed it, but 2.5% for 5 years; or 1.75% for 2 years.

I'm feeling like I should be able to 'do something' with this cheap money. Be it investing in something low/no risk (short duration corporate bonds to match the loan length?), or buying things now that will be more expensive in a couple of years, or...

Any ideas?

We've pretty much done the low hanging fruit on the house in terms of reducing expenses - new loft insulation, windows, solar panels.

There is a tax free account here that gives 2% at the moment, adjusted every 6 months, which will I assume go up... but 0.25% is not worth doing.

[LightStache]

In general I'm a fan of keeping some strategic debt on your personal balance sheet. Like if your NW is $1M, maybe $250K - $750K. For most people you see this play out with a home mortgage, where they invest extra cash instead of paying down principal.

The key difference with what you're contemplating is that they're investing in risk assets that almost always produce returns far greater that the mortgage interest in the long term. It doesn't work if you're borrowing at 2.5% and investing in bonds at 2.75%.

I have a line of credit for $100K at 3.75% and a 15 year term. After tax, my break-even is 4.95%. I drew $25K of the line and dropped it in VTI. I might draw some more, but even if I were to deploy the full $100K, the earnings aren't all that compelling.

[daverobev]

One option is certainly to buy a second property. I really don't think I want the hassle of being a landlord here though. It's very frustrating, because mortgage rates and terms are really good here.

3.75% for 15 years, that's a tough one.