How much leverage is safe in investing?

[Ax6isB]

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Suppose we've extra cash which we can put in a bank at 2.8% guaranteed interest then would it be prudent to keep it in bank or invest in the markets is what I want to know.
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I think this depends on your portfolio. For example, if you’re 100% into stocks now, adding some money to get guaranteed 2.8% might be a nice hedge particularly depending on your age.

This is a fascinating scenario. I think you’ll get a lot of ideas from folks once they feel you’re not being taken for a ride as your scenario is intriguing. I’m a huge fan of eliminating debt and I don’t think I could do this personally. Debt’s a barrier to financial independence (we still have a little mortgage left and I hate “working for the bank”).

As you said, indexes generally outperform 2.8% over a ten year period but past performance is no guarantee for future results but i think you’ve already discovered that in your research.

[RMA]

Suppose we've extra cash which we can put in a bank at 2.8% guaranteed interest then would it be prudent to keep it in bank or invest in the markets is what I want to know.
[/quote]

I think this depends on your portfolio. For example, if you’re 100% into stocks now, adding some money to get guaranteed 2.8% might be a nice hedge particularly depending on your age.

This is a fascinating scenario. I think you’ll get a lot of ideas from folks once they feel you’re not being taken for a ride as your scenario is intriguing. I’m a huge fan of eliminating debt and I don’t think I could do this personally. Debt’s a barrier to financial independence (we still have a little mortgage left and I hate “working for the bank”).

As you said, indexes generally outperform 2.8% over a ten year period but past performance is no guarantee for future results but i think you’ve already discovered that in your research.
[/quote]

Thank you for your reply. Yes I understand that since this case is so uncommon and hard to believe hence I am not getting any great ideas from whoever I am asking.

I should have rephrased the question in a different way like if I have extra cash which I won't need for some time and I can put it with some bank at guaranteed 2.8% interest then should I do that or invest in the markets. If I invest in the markets then where so that I generate at least 2.8% return or more.

[Ax6isB]

I should have rephrased the question in a different way like if I have extra cash which I won't need for some time and I can put it with some bank at guaranteed 2.8% interest then should I do that or invest in the markets. If I invest in the markets then where so that I generate at least 2.8% return or more.

Now I think we’re off to the races! Take 2.8% guaranteed or invest?

[Beaglehound]

I should have rephrased the question in a different way like if I have extra cash which I won't need for some time and I can put it with some bank at guaranteed 2.8% interest then should I do that or invest in the markets. If I invest in the markets then where so that I generate at least 2.8% return or more.

Now I think we’re off to the races! Take 2.8% guaranteed or invest?

I would bite hands off (not my own though) for 2.8% guaranteed. I am in my 50s and moderately risk averse though.

[RMA]

I should have rephrased the question in a different way like if I have extra cash which I won't need for some time and I can put it with some bank at guaranteed 2.8% interest then should I do that or invest in the markets. If I invest in the markets then where so that I generate at least 2.8% return or more.

Now I think we’re off to the races! Take 2.8% guaranteed or invest?

Yes this should have been the real question. So far I have maxed my nisa with emaxis slim world equity all country. Now if I invest in similar maxis ETF in tokutei account then how much dividends per year can I expect? Also whether I can deduct the interest expenses from the dividend income for tax purposes? Are there any other safe and sound options?

[RMA]

I should have rephrased the question in a different way like if I have extra cash which I won't need for some time and I can put it with some bank at guaranteed 2.8% interest then should I do that or invest in the markets. If I invest in the markets then where so that I generate at least 2.8% return or more.

Now I think we’re off to the races! Take 2.8% guaranteed or invest?

I would bite hands off (not my own though) for 2.8% guaranteed. I am in my 50s and moderately risk averse though.

Really? I think 2.8% won't even cover the inflation down the road. We're better off spending the money or buy any hard assets in that case.

[Kanto]

Now I think we’re off to the races! Take 2.8% guaranteed or invest?

I would bite hands off (not my own though) for 2.8% guaranteed. I am in my 50s and moderately risk averse though.

Really? I think 2.8% won't even cover the inflation down the road. We're better off spending the money or buy any hard assets in that case.

Inflation has been very low in Japan over the last few decades. A guaranteed 2.8% would be amazing. Japanese 10Y bonds give .1% atm.

https://www.statista.com/statistics/270 ... -in-japan/

[adamu]

I'm really struggling to understand what the topic of this thread is, there are so many hypotheticals. I think the replies are also confused too, due to a lack of forthright information.

Where does the 2.8% loan come from? Is it something that actually exists, or is it hypothetical? If it's hypothetical, why did you pick 2.8%? If it actually exists, is it a loan, or are you only explaining it as a loan but it's actually some other thing that you don't want to give us the full story on for some reason? The original post said overdraft facility. Is that an overdraft with a Japanese bank? Which one? Let's get some concrete information to work with here.

[RMA]

I'm really struggling to understand what the topic of this thread is, there are so many hypotheticals. I think the replies are also confused too, due to a lack of forthright information.

Where does the 2.8% loan come from? Is it something that actually exists, or is it hypothetical? If it's hypothetical, why did you pick 2.8%? If it actually exists, is it a loan, or are you only explaining it as a loan but it's actually some other thing that you don't want to give us the full story on for some reason? The original post said overdraft facility. Is that an overdraft with a Japanese bank? Which one? Let's get some concrete information to work with here.

I understand that it's getting very confusing because of lack of details.

For simplicity case, I have to decide between 2.8% guaranteed yearly returns vs investing. Which one should I choose. I just turned 40 started NISA this year, already maxed it out, going to start ideco soon. All these years I was living under the rock, only saving in cash. Now what are my options?

[adamu]

Sorry you didn't answer any of my questions. Maybe others will have something useful to contribute but I really don't see the value of these hypothetical discussions. "Let's say", "what if", "let's assume", "suppose", "for simplicitiy case". I can't figure out if there's a genuine thing you're trying to solve, or whether this thread is just some sort of thought experiment.