Appreciate you feedback Steze, terran, and MTBmustachian. MTBmustacian, you're absolutely correct, no excuse. Wifey IRA is coming.
To speak to terran and Steze, what is driving some my hesitation is a conversation I'm having with someone else. Rather than try and paraphrase, here is his latest point. Curious what you would say to this:
When investing with borrowed money, you must keep this in mind – the interest that you are charged is on the full amount, yet should the amount of principal shrink, the amount of return you receive will be only on that reduced amount. For this reason, the timing of any investment losses can have a serious impact on your ability to break even on the investment. This is why the actual returns, and not average returns will be important to you.
For example:
If you borrow $25,000 with a 3.5% interest charge, the cost of that is $875.
To break even the first year, your investment must earn 3.5%. Anything above that is profit.
If, instead the investment loses, let’s say 5%, the balance would be $23,750. In this year, you would be charged the $875 with no earnings. Therefore, the burden of the first year’s $875 and the second year’s $875 would fall to the now balance of $23,750.
In order to do this, the $23,750 must earn 7.5% just to cover last year’s and this year’s cost. In order to avoid the same thing happening the third year, year two has got to be a little over 12.6% to recover the lost 5% and get back to a balance of $25,000 - so year 3 can start from scratch. (Not to mention the chance that it could be negative again, or flat.)
This relationship is compounded over the life of the strategy, as there is always the negative movement of the interest charge yet no guarantee of a gain, loss, flat from the investment side.
Can you see why it’s particularly difficult to make a profit on speculating with borrowed money? Your strategy would have to be a sure thing without a doubt. This is perhaps why many financial gurus out there start with getting out of debt, because if you’re borrowing money somewhere in your life in order to put some other money to work in an investment. It has the same overall net effect.