Cash Vs. Finance

Bobbo wrote:

mich800 wrote:

Bobbo wrote:
Financing something instead of paying cash is no different that borrowing money to invest it. In a good economy, you can get away with it. If a recession hits, you can lose, big time. If you can't afford to pay cash, that is one thing. If you CAN afford to pay cash, you are betting your financial security on the economy staying strong.

I don't see anyone recommending taking out a loan and just investing that money.

Those two scenarios are not the same. Run the numbers again and you will realize your error.

Both are owing someone money, paying interest on it, while you have money enough to pay it off, invested earning interest. Or "income" if you decide to quibble about the term "interest." How are they not the same? You are just betting that the interest you are earning is more than the interest you are paying. In a good economy, you can easily win. In a recession, you can easily lose.

No, in one you can sell the rv and payoff the loan and still have your investments. The other you have nothing at the end of the transaction. No one is suggesting taking out a big loan to invest. Just that there is an opportunity cost to liquidating your investments when relatively cheap money can be use for the purchase of another asset. (and keep your investments)

Your scenario is very risk adverse. Nothing wrong with that. Risk of principle is very low. But so are your returns (hopefully staying ahead of inflation). Which is not always the case with that strategy.