Several stocks have plummeted to half their value from earlier in the year, and many experts are saying that now is the time to buy low. But, if you don’t have cash on hand, it’s best to avoid draining your home equity line of credit to play the market.

Chris Farrell from American Public Media Marketplace explains:

“Yes, stocks may offer a high potential return, but only by taking on a considerable amount of risk. Remember, stock market returns are not guaranteed, but you will have to meet the interest payments on your loan no matter what–or put your house at risk. Borrowing on your home to invest in the stock market is always a bad bet. And in the current environment people need to be paying down debt, not adding to it.”

By withdrawing from your HELOC, you turn a stock purchase into a gamble secured by your home. This is the kind of irresponsible risk taking that caused a lot of the national financial troubles we’ve seen this year.

See Also:

5 Financially Sound Ways to Use a HELOC

Avoid Using Your Home Equity Line of Credit for College

Tags | Heloc, home equity line of credit, stocks