Let's say your home is currently worth $200k and its payed off. Let's say you take that $100k mortgage and invest it. In the future there is a recession (or a a foreign war) and the market tanks - you're investment loses 50%. Then the bottom falls out of the housing market to the tune of 50%. Now your home is fully mortgaged (no more equity) AND you only have $50k in assets. You're so screwed it ain't funny.

I think the wise thing to do if you decided to do this would be to take a few bucks and invest in a tent - so you don't have to scramble for one when you become homeless.

Not crazy at all but definitely comes with major risks as many have pointed out.

A little different version is in my case I had cash from the sale of some family land and instead of paying off my 2% mortgage, I chose to put it all in the market.

Similar thought process - put into a broad US market ETF and let it earn 7/10% while I continue to pay off the 2% mortgage like normal.

Hopefully, it all works out - I guess for me the key is long term - I can pay the mortgage no matter what happens AND I do not need the money for 10+ years.

Might just be smarter to put that prospective loan payment into the market instead and eliminate the wait period of paying back the loan.

Let's say you have 100k in your house as equity.
S&P 500 pretty much guarantees a 10% reasonably safe return.
Interest Rates are at 2% to 3% on a home loan.

It can't be that simple. I know I am missing something here.

there is a no risk investment of 10k a year, with I-bonds.
right now the interest is over 9 percent. it is tied to inflation and changes every 6 months.
if you don't need it for over a year it is a good place to park money you don't "need" but don't want to risk either.
worst case it makes 0, but you can't lose money in it.

You'd be gambling with your home equity. With recession looking more and more likely, I wouldn't do it. FWIW, my meager portfolio came from savings that are earning nada. I don't have immediate need for the funds so I'm prepared to ride it out. Keeping 3 years living expenses in reserve.

https://www.yahoo.com/now/stocks-sink-inflation-recession-fears-184011387.html

This idea works great sometimes. Other times you go bankrupt. 2008 is a good example of what can happen. House prices dropped, the stock market tanked and a bunch of people got laid off. In your situation you would still owe money on the house which wasn't worth what you paid for it. The equity you invested in the market is gone and you just lost your job. If you don't think that can happen then you either were not born yet in 2008, or you didn't pay any attention to what was happening around you.

Right now is an interesting situation to try out what you are suggesting. The market is down 20% but house prices are way up. If you think house prices are going to stay up forever then pull all of your equity out of your house and put it into the stock market. That way when the market goes up you'll make a ton. And if house prices stay high you won't have any problems. But, if the stock market goes down you'll lose part of your equity. If the stock market goes down and house prices drop and you lose your job then you might end up broke with no house.

Let's say you have 100k in your house as equity.
S&P 500 pretty much guarantees a 10% reasonably safe return.
Interest Rates are at 2% to 3% on a home loan.

Let's say you do a cash out refinance and got that 100K in equity in cash and invested it in an S&P 500 fund.

It seems to me that the investment would earn more than the interest being paid on the loan. Your home appreciation wouldn't be changed. So you would net net 7% return on your equity that would normally earn nothing.

I know there are investments which would earn more money but with better returns come bigger risks so I like the S&P 500 for the lack of risk in this example.

It can't be that simple. I know I am missing something here.

OK, So is any one savvy enough to go back to the date of the original post, Calculate the idea, and see where the OP would be today ?

OK, So is any one savvy enough to go back to the date of the original post, Calculate the idea, and see where the OP would be today ?

Buy low , sell high.
After that , I got nothing.

Down about 6%

100K invested that day in SPY would be worth about 94K today

It would be about flat with a conservative options strategy approach. With an aggressive strategy, the original $417-420 cost basis would be in the 355-360 range.

I was just curious Did you by chance factor in the payments or just the flat 100K? Probably hard to do as the loan costs, and the length of the loan would be unknown variables but would also drive up the loss

thanks

i keep getting junk mail that says [if you give] $25.00, it will turn into $75.00.
i'm still trying to find out how i can do that for myself !

get a good copier LOL, My wife was making a birthday card with multiple 100 dollar bills and it was flipping amazing other than the paper itself how hard it was to tell the difference.
Watched a movie recently where the C/F'r used hair spray to stiffen the bills and create texture If one did a bunch of 10's or 20's on better paper they could likely slide quite a few

get a good copier LOL, My wife was making a birthday card with multiple 100 dollar bills and it was flipping amazing other than the paper itself how hard it was to tell the difference.
Watched a movie recently where the C/F'r used hair spray to stiffen the bills and create texture If one did a bunch of 10's or 20's on better paper they could likely slide quite a few

Might be illegal, be careful you know there are a few here that would drop a dime on you.

https://legalbeagle.com/7612138-illegal-copy-currency.html

i keep getting junk mail that says [if you give] $25.00, it will turn into $75.00.
i'm still trying to find out how i can do that for myself !

I know a girl that can turn that $25 into ZERO. And a bunch more $25's along with it.