Prime Rate Credit

This is a very interesting concept that I just recently learned from a friend, and to be honest, I’m really unsure of all the ins and outs of doing things this way to invest money for one’s retirement, but I thought it sounded like a sort of innovative idea nonetheless.

This person, who happens to be approaching retirement age, told me that they just got a second mortgage on the house (which by the way, was almost paid off, another point that probably must be taken into consideration), and took the proceeds of the second mortgage and reinvested them into a retirement investment account of various investment instruments.

There are probably several factors to consider if you wanted to try something that is innovative like this in an effort to extend your retirement resources and invest more for the future. For example, it probably depends on what type of interest rate you are receiving on the mortgage. If it’s a high one, it may not even be worth it, unless you can guarantee you will be making more on that investment percentage wise in interest.

Another may be how much equity you have built up in your home. If you don’t have a whole lot, that may be another consideration. You’d be essentially re-debting yourself when you don’t even have much worth built in the house to begin with, and that could definitely deter some people.

Yet another consideration might be how far from retirement you are. In other words, is the compound interest you are going to earn on the money invested going to have enough time to compound to make this somewhat radical move worth it? Compound interest basically means that you are multiplying your money many times over by letting it stay invested for a longer period of time, ie 15-20 years.

There are probably tons more considerations I’m not even thinking of, but that might be a good starting point.