do people take out loans to put in high interest savings/deposit accounts?

Question

I know people take out loans to buy stocks. Someone told to me that would cause double taxation somehow.

Answer 1

Even "high interest" savings or Money market accounts pay less than the interest rate a bank charges for a loan. That's how banks make money. They take in money and pay a low interest rate, and then they lend money out at a higher interest.

Answer 2

the same safety net of doctors in annuities which right now have some competitve features like an instant 10% match in the first year with a guarantee that if it performs to a negative you do not loose a dime...might sound like a wise idea as these tend to pay right now at about 12% annually and you can take out 10% of the total net value without penalty...you can beat the spread of the market and have a tax deduction...there is a way around the double taxation...it is more complicated but not impossible...

Answer 3

I think here it would be a simple matter of determining the cost of the money your borrow.. APR to the cost that the account will pay you. Also look at tax considerations. Some money could be tax free. Also calculate in "peace of mind". Some investments are not worth it if risky or keep you from a good night sleep! :)

Answer 4

Its rare to find high intrest acount to make enough money to cover the cost of the intrest of the loan. Its usually a few points higher to borrow the money then you get on it, in the end the banks always win

Answer 5

I have met people who purchase houses outright on credit cards for investment purposes. Thus I suppose it is the amount of risk your are willing to support with your investment that determines "actual risk" in the mind of the beholder.


Yes I do consider a piece of property a savings account!