Loan at a low % Would you?

[Rdy2Fire]

Question for the Mustachians ..

If you could take a loan of 100K (for example; it could be ANY amount) for 1.25% interest only for 1 year or 1.5% for 3 years (basically $1250 for 1 year or $4500 for 3 years) with the lump sum due at the end of the term. Would you

#1 take it?

If yes

#2 invest it thinking you could make more then 1.25/1.5% in the same time period

or #3 just keep it and use it as your spending money for 1/3 years to let your current investments grow

[Alternatepriorities]

In March I absolutely would have taken that deal. At current market valuations it seems a little riskier. 1.5% is1/2 of my mortgage rate so if nothing else it would make sense to borrow 3 years of mortgage payments and prepay it.

[Rdy2Fire]

In March I absolutely would have taken that deal. At current market valuations it seems a little riskier. 1.5% is1/2 of my mortgage rate so if nothing else it would make sense to borrow 3 years of mortgage payments and prepay it.

It was also available as 5 yrs at 1.99% I didn't add that in but yes this would be ideal for someone that has a higher mortgage rate and wanted to buy out their mortgage while saving money every month (just paying interest) and pay back the principal in 1/3/5 years. Not something I was looking at but it could be a use for it is someone needed it, could be same with an expensive car and not great car loan rate

[Alternatepriorities]

It was also available as 5 yrs at 1.99% I didn't add that in but yes this would be ideal for someone that has a higher mortgage rate and wanted to buy out their mortgage while saving money every month (just paying interest) and pay back the principal in 1/3/5 years. Not something I was looking at but it could be a use for it is someone needed it, could be same with an expensive car and not great car loan rate

If I were looking to invest the money, I would probably choose 5 years at 2% over the shorter term loans. However, the closer I am to FI, the less appealing it is to take on extra risk. I wish I had realized that when I was just starting, a bit of leverage in '08 would have made an enormous difference in getting to FI, but now it won't make much difference and if it goes wrong it's harder to recover. Is your user name indicative of your finances, your mental state, or both? :)

[Rdy2Fire]

 Is your user name indicative of your finances, your mental state, or both? :)

It was my mental state when I joined but I guess you can say now I could change it since I'm no longer Rdy2Fire and, I guess FIRE'd. I say I guess because sometimes I think about what to do next or that I should work longer just to give me more to do

[Alternatepriorities]

 Is your user name indicative of your finances, your mental state, or both? :)

It was my mental state when I joined but I guess you can say now I could change it since I'm no longer Rdy2Fire and, I guess FIRE'd. I say I guess because sometimes I think about what to do next or that I should work longer just to give me more to do

Personally, I definitely would not use leverage to increase likely returns if I were completely FIRE'd. What's the point of having more money than I need if it also comes with additional risk and worry?

[Christof]

Considering that my mortgage is 0.8% for ten years, no, I wouldn‘t take it. I also do not invest short term, and three years is absolutely short term. Nor do I invest on loans when I have little control over my investment. The risk just isn‘t worth it.

[Rdy2Fire]

 Is your user name indicative of your finances, your mental state, or both? :)

It was my mental state when I joined but I guess you can say now I could change it since I'm no longer Rdy2Fire and, I guess FIRE'd. I say I guess because sometimes I think about what to do next or that I should work longer just to give me more to do

Personally, I definitely would not use leverage to increase likely returns if I were completely FIRE'd. What's the point of having more money than I need if it also comes with additional risk and worry?

It wasn't really the idea of investing it, I just asked that because I was curious if people would. It was more the idea of not touching investments (i.e pulling money from them) and using the loan $$ as living $$ with the thought that leaving the same amount of $$ invested (in a larger pool of investment dollars) would yield more then the interest rate of 1.25-1.99%

[Alternatepriorities]

 Is your user name indicative of your finances, your mental state, or both? :)

It was my mental state when I joined but I guess you can say now I could change it since I'm no longer Rdy2Fire and, I guess FIRE'd. I say I guess because sometimes I think about what to do next or that I should work longer just to give me more to do

Personally, I definitely would not use leverage to increase likely returns if I were completely FIRE'd. What's the point of having more money than I need if it also comes with additional risk and worry?

It wasn't really the idea of investing it, I just asked that because I was curious if people would. It was more the idea of not touching investments (i.e pulling money from them) and using the loan $$ as living $$ with the thought that leaving the same amount of $$ invested (in a larger pool of investment dollars) would yield more then the interest rate of 1.25-1.99%

I pretty much see those as the same thing. And in March it would have been a lot more tempting to take a loan out rather then sell stocks during a crash, but today's prices don't give me the same incentive.