Updated almost 6 years ago on . Most recent reply
401K Loan @ 4%...fund down payment and receive the interest?
Hi all! Been scouring the forums and web around this topic and wanting to see if anyone looked at a 401K loan from another lens. While I understand some of the drawbacks and implications of a 401k loan and the fact that you ultimately still pay tax on the interest, it still intrigues me.
If i'm paying myself the 4% interest on the loan and take the funds and place them into a real estate investment that earns a 10% annual cash on cash return, wouldn't that be a potential good use of the load funds and creating two ways of obtaining interest returns (assuming the market over the same time frame performs under that)?
Not trying to oversimplify but other than the 401K issues of leaving the job and loan being due in full and missing out on 401K funds gains over the loan time frame, what am I possibly overlooking that would make this a bad idea?
Thanks for you time!
Garrett