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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (58900)	1/18/2001 10:54:11 AM
From: Mama Bear	Read Replies (1) \| Respond to of 436258

"buy stocks in a 401k and borrow against it ... isn't that a leveraged monthly payment plan to buy stocks. " That's not the way my hubby's 401k works. When you take a 'loan' they cash out investments and your balance falls by an equivalent amount. Of course you have to redeposit it or you will incur the penalty. It is more accurately a bookkeeping fiction that allows you to take a penalty free distribution than an actual loan. The 'interest' you pay on the 'loan' goes straight into the 401k. In short, no money is really loaned, rather it is withdrawn and redeposited on a set timetable. It is not kosher to leverage qualified money as far as I know. "Got a buddy who says he'd never use margin. Last year he bought a car and borrowed funds at 6 something percent when he could have easily paid cash -- kept the money in investments instead. Whatsa difference -- could have bought the car outright and purchased stocks back on margin -- only difference might be the rate differential -- he is still leveraged to the market " One important difference is that he can't be sold out in a market swoon. Regards, Barb