Risks of using a home mortgage for stock market investing
Borrowing heavily against home equity to invest in the stock market creates constant anxiety and sleeplessness over potential market crashes. If the portfolio takes a major hit while being heavily leveraged, investors risk losing their home equity and facing difficulties keeping up with loan payments.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1Maintaining plenty of free cash to cover payment risks
- 2Borrowing against stock for expenses rather than full property leverage
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“What happens if your principal takes a hit and can’t meet the payments?”source ↗
spaceandcats · r/personalfinance · 1 upvotes
“Uh, you are 85% levered against your house with equity market risk?”source ↗
junesix · r/personalfinance · 1 upvotes
“I wouldn’t be able to sleep.”source ↗
flipflops81 · r/personalfinance · 1 upvotes
Where this came up
People with this problem also raised
- 2Why does the safe withdrawal rate drop with bonds?
- 4How to handle a house and mortgage before getting married
- 5How to cope with insanely high house prices and interest rates
- 6Should I buy property or keep my money invested?
- 3How to rebalance a concentrated stock portfolio without a huge tax bill
- 3Am I liable for property damage caused by a sublease tenant?