It’s surprisingly easy to borrow from your 401(k) — but that doesn’t mean you should
But are such loans a good idea?
The advantages of such a loan include that there is no credit check and relatively little paperwork. In contrast to an outright withdrawal of money from your 401, furthermore, a 401 loan is tax-free. And compared with the interest rate you’d have to pay on some other kinds of consumer loans, the rate on a 401 loan is often significantly lower.
Yet another disadvantage is that you’re not really borrowing from your 401 but actually reducing the amount you have invested in your 401. Insofar as those investments appreciate during the time of your “loan,” your net cost will be a lot more than just the loan interest. To be sure, the opportunity cost of a 401 loan could instead work to your benefit if your 401 declined in value during the time of your loan. This happened, for example, to those who took out a loan from their 401 in 2007, before the Great Recession.
Furthermore, a HELOC doesn’t reduce the amount you have invested in your home equity. Even with a HELOC, you still will gain the entire amount on your real estate that you would have absent the loan.
Brasil Últimas Notícias, Brasil Manchetes
Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.
Fed chief says economic theory of unlimited borrowing supported by Ocasio-Cortez is just 'wrong'An increasingly popular theory about progressives posits that the government can continue to borrow to fund social programs.
Consulte Mais informação »
Powell says economic theory of unlimited borrowing supported by Ocasio-Cortez is just 'wrong''The idea that deficits don't matter for countries that can borrow in their own currency I think is just wrong,' Fed Chair Jerome Powell said of the modern monetary theory, an economic theory supported by progressives like Rep. Alexandria Ocasio-Cortez.
Consulte Mais informação »
Hillary Clinton: 'Just Because I’m Not Running, I’m Not Going To Keep My Mouth Shut'Hillary Clinton said she 'can't imagine' any circumstance in which she wouldrun for president again in 2020 or beyond
Consulte Mais informação »
Russia expert: Russian view on N. Korea success not same as U.S.Russia’s foreign minister says the U.S. reached out to Russia for advice ahead of President Trump’s second summit with North Korean leader Kim Jong Un. Ali Velshi talked with Nina Khrushcheva, a Professor of International Affairs at The New School, about what Russia hopes will come out of the Trump-Kim meeting.
Consulte Mais informação »