I'm 30, the most valuable thing that I have on my side is time. If I were to take out a $25,000 loan, invest it in a roth IRA and pay the monthly loan and contribute to the ammount won't I be better off in the long run when i retire due to compounding interest? Can anyone see anything wrong with leveraging my time like this?
>>2079118
In the technical sense, this would stand a good chance of working out, assuming your interest rate is low enough compared to expected value of investment growth.
But for a substantial number of people, if they borrowed $25K to buy stocks and the market tanked, they would panic and end up selling low. And a substantial number of the rest would at least pay for it in ulcers and worry.
A somewhat similar technique, but less return and also less worrisome, would be to invest monthly in your IRA as usual but invest the funds into something like ProShares Ultra S&P500 (SSO). (Note that it doesn't precisely track 2 times the S&P in the long run, but it is somewhat close.)
Me, I'd start getting worried at around a leverage of 140% or so at 30, but I'm a cautious guy.
ITT: someone who doesn't know the interest rate a bank would charge him on an unsecured personal loan
>>2079440
Well, he didn't say unsecured, but if so, you'd be making a good point.
>>2079470
No one with any actual assets would ask such a faggy question, so much assumption is pretty safe...
>>2079547
You make asking and learning about finance so much fun.
>>2079636
>>2079659
Can you explain a little further on why this wouldn't work?
>>2079687
interest is gonna be yuuuge on your personal loan dingus
only way to make it worthwhile is to overleverage yourself a ton and then get fucked at any bumps in the market
>>2079118
Just buy cdos
>>2079687
Interest rates on an unsecured loan are going to be in the double digits. You're basically print it on a credit card. Mathematically this could work out if returns were higher than the interest paid, but then you only get to keep the residual, which would be razor thin.
I agree with the earlier poster. Skip this and focus on hitting your 5k annual IRA contribution limit. If you have 401ks from previous jobs, roll them over to get a kick start. If you have an extra $25 or $50, throw that in there every month too. Keep it spread over a set of indeed funds and forget about it for three decades.
Check out a chart of what the growth would look like. Pic related is 400/month for 30 years.
>>2080624
Fucking autocorrect.
> You're basically putting it on a credit card...
> Spread it over a set of index funds...