What are the five reasons why you should not invest your home equity? What are the solutions to avoid these pitfalls?
The five reasons why you should not invest your home equity are as follows:
- Personal Consumption: Do not use home equity for personal consumption because it can lead to insolvency and eventual bankruptcy. Instead, access home equity to produce and invest in things that will generate returns.
- Lack of Knowledge & Chasing High Returns: Don’t invest in things that you know very little about or solely to make money. Only invest in things that reflect your knowledge, abilities, expertise, and passions.
- Unsafe Investments: Don’t invest in investments that don’t have clear value propositions, aren’t collateralized, are speculative, based on artificial demand, and have poor or no exit strategies. Instead, consider questions such as Is there a real demand for this investment? Is there a clear value proposition? Is it legal? Is it ethical and moral?
- Investments Removed From Soul Purpose: Invest in things that align with your Soul Purpose or mission in life. Only invest in things that you are naturally drawn to and are an expression of your Soul Purpose.
- Learning the Wrong Lessons: Learn the right lessons when things go wrong. Commit to learning what things you can change about yourself and your approach to increase your safety, returns, and success.
The solutions to avoid these pitfalls are to only access home equity to produce and invest in things that will generate returns, only invest in things that reflect your knowledge, abilities, expertise, and passions, consider the value proposition, collateralization, legality, ethics, and morality of the investment, invest in things that align with your Soul Purpose or mission in life, and learn the right lessons when things go wrong.
