Re: Scary article on retirement planning.

On Wed, 3 Dec 2003 20:40:55 +0000 (UTC), [EMAIL PROTECTED] (Marc
VanHeyningen) wrote:

>Thus said JC Dill <[EMAIL PROTECTED]>:
>>If you want a *really sweet* deal, get your retirement fund setup
>>somewhere  where you can borrow money from the fund, and pay it back
>>with interest.  Then take a loan from the retirement fun to help buy a
>>house.  Now when you pay interest on your homeloan, you pay it to
>>yourself!
>
>However, you pay the interest with after-tax dollars, but you get
>taxed on that money again when you withdraw it. 

Yes, but this is also true of interest the account earns when you
place the money in money-market certificates that pay *lower*
interest.

> Also you lose out on
>whatever other investment gains that money would have made, 

I'm assuming you have a balanced investment approach that doesn't put
all of your retirement funds into a single basket.  As such, you would
have some of your funds in a "safe" interest bearing account.

>and if you change jobs you'll find that loan is typically immediately due and
>payable in full.

The fund I knew of that allowed this was a fund that you could carry
with you when you left the job, and as such all of your investments
were untouched when you left your job.

>Borrowing from your retirement account is generally not a good idea.

This is very true, but that's because borrowing in general is not a
good idea.  But if you do have to borrow, and you can borrow from
youself, then you get to pay interest to yourself and not to someone
else.

jc