Mortgage Your 401(k)
What percentage of her net worth should a 30-year-old professional have in the stock market? I am not going to give you investment advice, and there is a wide range of plausible answers. 'Zero, put it all in Bitcoin' is I guess on the list. A popular rule of thumb would say 70% in stocks, with the other 30% in bonds and cash. There is, however, a good theoretical case that the right answer is really 200%, or 500%: Most of a young professional's economic wealth is the present value of her future employment income, and borrowing money to buy more stocks is a good way to diversify away from that one risky asset. 1 Also many 30-year-old professionals buy houses for considerably more than 200% of their net worth, and putting 200% of their net worth into the stock market could again be useful diversification.
But it is not easy to put 200% of your net worth into the stock market, because where will you get the money? A mortgage on a house is a pretty standard product in the US, but a mortgage on a retirement account is not. Bloomberg's Suzanne Woolley reports on someone trying to change that:
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