Did this investor wanted to know, should they borrow or invest? So they’re looking at a hilar and he looked at 5.5 and a 50,000 loan out, or their 401k for four and a half percent. So I guess first thing, I mean, awesome, cool. You’re looking to borrow. Most people would think this is. Total sin by taking money away from your equity of your house or worse your retirement system, because we’re all trained in program that that is absolutely very nodded to do.
You shouldn’t do that. I think you’re looking at this the right way, right? Like, let’s look at this arbitrarily. We are going to take a loan or let’s compare interest rates. So five and a half percent on the hilar four and a half percent on the 401k loan of, from a tax perspective. If you play your cards right, you should.
Still be able to finagle to get that Wheelock as a deduction because you’re using it to further improve your business. And that’s the key word right there. So five and a half. And you should be able to deduct that might be less than 5% after it’s all said and done after taxes before one K loan is at four and a half percent, but I don’t think you can deduct that.
And that one, you’re kind of paying it back to yourself in a way. Depends what you want. I mean, I think you’re splitting hairs here and kind of wasting your time. Hopefully you don’t, you’re not sitting on this for more than a couple of days thinking about this. Like just do one, like. It basically comes down to which one would you rather put leverage on your home you live in or your retirement funds?
To me, I think that you can look at it from this perspective, which one of these assets is more at risk for you losing your money over night. And I think it’s the 401k then the value of your home. So I would go after the 401k loan first and exhaust that funds.