Rennie,
Nobody would dare to suggest buying or selling, since it's a personal decision. Only you can make that call. That said. Here are a few comments for you to ponder:
- Assuming that your personal finance is solid, i.e. if you lost the entire $30,000 investment you would be fine, with a roof over your head and enough money for grocery. Let's start with that then it would be a gamble to risk $30k for some potential gain. If you can double the money, then $30,000 gain would be a nice sum. If you are really lucky with this roll of the dice, then @10/s you would get over $100k gain. These are the simple math that could come handy.
- A 5% interest rate is not bad: 0.05 x $30k = $1500/yr = $120/mo. A monthly payment of $120 + principal (say $380/mo) = $500/mo. Can you support a payment of $500/mo without impose too much hardship on life style?
- You could reduce the interest payment somewhat (sometimes up to 50%, depending on your tax bracket) for you use the LOC for investment purpose (e.g. direct deposit to your stock account). This reduction is nice, since effectively your interest rate would be 2.5%, but your monthly payment would be governed by the principal amount which you could reduce if you want to spread the "retirement" of your loan over a longer period.
These are some of the things that would normally be considered in a decision to borrow for investment. Your call. But, don't try playing with the margin in your stock account, at least I would not touch that margin (they charge quite a hefty interest rate), for fear of a margin call. I prefer to have the control in my hands, not in some trigger happy computer from a stock brokerage firm.
Good luck.
goldhunter (no accountant)
