Quote:
Originally Posted by The Yen Man
Here's something I've been thinking lately. Lets say you've saved enough to put down 20% on a home. If you were confident in your abilities to earn a 10% return, wouldn't the smart thing be to put down as little down payment as possible and invest the rest of the money? So if you put down 5% and keep 15% to invest, you're paying a 3% (or whatever your mortgage interest rate is) to borrow another 15% from the bank. That's a 7% return.
Of course, this all hinges on your confidence in earning that 10% per year.
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It doesn't rely on your confidence to earn that 10% but rather your actualy ability to do so. Many people have confidence to do that, very few if any can. Maybe I've been reading too much Benjamin Graham lately, but I don't see that being viewed as a smart move either.