As I’ve previously posted, using a home equity line to invest in stocks is a bad idea. Since HELOC rates are down and stocks are falling, this idea is coming up more often in conversations and financial forums. Three words: Don’t Do It.

Stock investing is making a wager with your home. If stocks fall further, you have a lot to lose.

There are a few smarter ways to make money with a home equity line of credit in today’s market. It does take a bit of financial savvy (comparing interest rates and terms) as well as some serious responsibility (never missing a payment).

If you’re up for it, consider this tip from a recent BusinessWeek article:

“…those who can still tap their HELOC can use it to build up cash and, in rare cases, make a little money. If your HELOC rate is 5% or lower, consider drawing down that cash and buying a one-year certificate of deposit that’s yielding north of 4%, says John Ulzheimer, president of consumer education at Credit.com. You’ll also get a tax deduction, which can help make up for the difference. “If HELOC rates go up, pay down the money and you are off the hook,” he adds. The main point is to gain access to cash, with the arbitrage a side benefit.”

Remember to invest smartly. Choose investments that are insured by the FDIC and that you can break early if neccessary.

See Also:

Using a Home Equity Line to Buy Stocks

5 Financially Sound Ways to Use Your Home Equity Line of Credit

Tags | CD, Heloc, heloc withdrawals, home equity line of credit