Like your father, many people have borrowed against their homes to buy stocks and investment property, as well as consumption items. This is risky. Roubini’s historical review shows the S&P500 loses 28% on average in a recession, and this one is probably going to be much worse.
Borrowing against one’s home to invest in declining asset that is declining (stock and home) is not wise, in my opinion. If your dad’s house is worth $350K in 3 years, and his $250K in the stock market is worth $125K, he will be much worse off. Your idea seems a good one, but at the current economic time, it has a high probability of big losses. It may take 10 years or longer for our economy to recover from this housing bubble, which was a cover up for the tech stock bubble. We actually have two bubble fallouts whose results we have not yet absorbed. For that reason, I expect a long protracted recession. Why wouldn’t your dad just sell his house – then the profits are true profit, not just debt, and they cannot be cut in half.
