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Reply to "Explain to me why it's a bad idea to borrow against your 401k?"
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[quote=Anonymous]OP I have done this twice for major home purchases. It is a good idea if you are careful. You also need to be aware that the money you borrow is not reinvested until you pay it back; meaning, it will not earn more than the interest you are paying yourself on it. Which, when the market swings down, could work out in the long run :) Just make sure that money is back in when it swings back up! The IRS also limits personal loans to one every 5 years. So you cannot do this again until this loan is paid back, and then you have to wait until it's been 5 years. Which is why, as a PP mentioned, it's best to limit it to true emergencies unless you have another source of backup, like the family gold mine.[/quote]
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