Buying with monopoly money

[jpinpb]

[quote=deadzone]
jp, so what you are saying (i think) is to refinance the house and pull out the money at let’s say 4.5% for arguments sake, and hold it in short term account temporarily. Then when inevitably interest rates start shooting up and you can get safe short term debt instruments for above 4.5% start purchasing these.

I like the logic, just be aware of the risks. The short term cash accounts currently are earning maybe 1% so while you are awaiting the interest rate boom you would be losing significant amount of money. Once you start purchasing debt, to be safe you would have to stick to relatively short term. If you buy 10+ year instruments and interest rates keep moving higher then you will have to hold them until maturation or possibly lose your ass.

Also, it could be a long time before interest rates go up significantly (short term rates above 4.5%). Unlike sdr, the Fed (and US government) knows full well that a significant ramp up in interest rates in the next 1-2 years would be catastrophic (reset chart). So they will continue to do everything it takes to keep that from happening (QE3, QE4….QEn).

So if I were following this strategy, I would have to be willing to take the risk of losing 1-3% for at least the next two years. And again, I wouldn’t risk putting any of the money into longer term instruments.[/quote]

deadzone – yes, that’s the rub, as I even stated. Rates will eventually go up. The unknown factors are when and how high. So in the interim, you could be eating it short term. It would be idle money, basically, until the rates start to rise. Say rates rose to 10% in 5 years. Potential to earn a fair amount is considerable when you look at a home at 4.5% for 30 years. There’s a risk, no doubt.

[MountainBound]

Thanks SD, luckily I saw the train coming, partly due to living through the 80’s. I’m a pretty conservative investor and have been pretty lucky investing in GLD and SLV in 2008. I’m up 55% and 112% respectively (wish I would have put alot more in at the time). I believe that the FED has run out of options and printing money is their only option now. Hyper inflation is coming, not sure when, but it’s inevitable. When that happens interest rates will skyrocket and housing will evaporate. Believe me, I was building houses in 1982, watching rates go up daily.

If I were to take a 5% loan,effective rate would be around 3.6% with the tax break, then get into 10-year treasury when rates are over 10%, I think it might work. Worse comes to worse and rates never go up, I could pay off the loan and be done with it. I’m sure there are risks, but I’m confident the financial mess will get much worse from here. What do you think?

[MountainBound]

Thanks SD, luckily I saw the train coming, partly due to living through the 80’s. I’m a pretty conservative investor and have been pretty lucky investing in GLD and SLV in 2008. I’m up 55% and 112% respectively (wish I would have put alot more in at the time). I believe that the FED has run out of options and printing money is their only option now. Hyper inflation is coming, not sure when, but it’s inevitable. When that happens interest rates will skyrocket and housing will evaporate. Believe me, I was building houses in 1982, watching rates go up daily.

If I were to take a 5% loan,effective rate would be around 3.6% with the tax break, then get into 10-year treasury when rates are over 10%, I think it might work. Worse comes to worse and rates never go up, I could pay off the loan and be done with it. I’m sure there are risks, but I’m confident the financial mess will get much worse from here. What do you think?

[MountainBound]

Thanks SD, luckily I saw the train coming, partly due to living through the 80’s. I’m a pretty conservative investor and have been pretty lucky investing in GLD and SLV in 2008. I’m up 55% and 112% respectively (wish I would have put alot more in at the time). I believe that the FED has run out of options and printing money is their only option now. Hyper inflation is coming, not sure when, but it’s inevitable. When that happens interest rates will skyrocket and housing will evaporate. Believe me, I was building houses in 1982, watching rates go up daily.

If I were to take a 5% loan,effective rate would be around 3.6% with the tax break, then get into 10-year treasury when rates are over 10%, I think it might work. Worse comes to worse and rates never go up, I could pay off the loan and be done with it. I’m sure there are risks, but I’m confident the financial mess will get much worse from here. What do you think?

[MountainBound]

Thanks SD, luckily I saw the train coming, partly due to living through the 80’s. I’m a pretty conservative investor and have been pretty lucky investing in GLD and SLV in 2008. I’m up 55% and 112% respectively (wish I would have put alot more in at the time). I believe that the FED has run out of options and printing money is their only option now. Hyper inflation is coming, not sure when, but it’s inevitable. When that happens interest rates will skyrocket and housing will evaporate. Believe me, I was building houses in 1982, watching rates go up daily.

If I were to take a 5% loan,effective rate would be around 3.6% with the tax break, then get into 10-year treasury when rates are over 10%, I think it might work. Worse comes to worse and rates never go up, I could pay off the loan and be done with it. I’m sure there are risks, but I’m confident the financial mess will get much worse from here. What do you think?

[MountainBound]

Thanks SD, luckily I saw the train coming, partly due to living through the 80’s. I’m a pretty conservative investor and have been pretty lucky investing in GLD and SLV in 2008. I’m up 55% and 112% respectively (wish I would have put alot more in at the time). I believe that the FED has run out of options and printing money is their only option now. Hyper inflation is coming, not sure when, but it’s inevitable. When that happens interest rates will skyrocket and housing will evaporate. Believe me, I was building houses in 1982, watching rates go up daily.

If I were to take a 5% loan,effective rate would be around 3.6% with the tax break, then get into 10-year treasury when rates are over 10%, I think it might work. Worse comes to worse and rates never go up, I could pay off the loan and be done with it. I’m sure there are risks, but I’m confident the financial mess will get much worse from here. What do you think?

[SD Realtor]

I agree with sdr, you are my hero as well. Back in the late 70s and early 80s my parents starting bond ladders with munis. They pretty much have lived off of those yields alone through their retirement.

[SD Realtor]

I agree with sdr, you are my hero as well. Back in the late 70s and early 80s my parents starting bond ladders with munis. They pretty much have lived off of those yields alone through their retirement.

[SD Realtor]

I agree with sdr, you are my hero as well. Back in the late 70s and early 80s my parents starting bond ladders with munis. They pretty much have lived off of those yields alone through their retirement.

[SD Realtor]

I agree with sdr, you are my hero as well. Back in the late 70s and early 80s my parents starting bond ladders with munis. They pretty much have lived off of those yields alone through their retirement.

[SD Realtor]

I agree with sdr, you are my hero as well. Back in the late 70s and early 80s my parents starting bond ladders with munis. They pretty much have lived off of those yields alone through their retirement.

[scaredyclassic]

Personally I think a fellow clever enough to have transacted as you describe should go w his own gut!

[scaredyclassic]

Personally I think a fellow clever enough to have transacted as you describe should go w his own gut!

[scaredyclassic]

Personally I think a fellow clever enough to have transacted as you describe should go w his own gut!

[scaredyclassic]

Personally I think a fellow clever enough to have transacted as you describe should go w his own gut!

[Author]

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