Earlier this week, MSN Money had an article on their website titled “ 3 Reasons to Tap into Home Equity to Buy Stocks.” The article has subsequently been taken down.
The article highlighted using the equity in your home as leverage to buy dividend-paying stocks. The article did not include the fact that dividend-paying stocks can lose considerable value…to the tune of 64% during the financial crisis.
Articles like this were everywhere during the housing bubble and for the people who acted on this advice it led to devastating consequences.
I hope that we have learned our lesson and would choose to ignore these articles and ones similar. However, as the market continues its gains be prepared for more of these to come. The more distance between the present and the financial crisis, (5 years and counting since the 09 bottom) the higher the tendency to forget the lessons we learned in the past.