Marian Snow’s book had a lot of promise. First, it discusses equity harvesting and how to get the maximum amount of equity out of your home without being taxed on it. Second, it discusses how to use that money to make more money. Sounds great on the surface, but this book failed to deliver and ended up being a major disappointment. The subtitle: How to Safely Leverage the Equity Trapped in Your Home and Transform It Into a Constant Flow of Wealth and Security seems a bit macabre now, in the wake of the housing crisis and one wonders how many people are regretting that they ever picked this book up.
Let’s start with first things first. The author is encouraging people to “free” all that nice equity in their homes and put it into something that will actually earn money instead of depreciate. Sounds good – but can be risky if you don’t pick the right investments. Quite honestly, leveraging the roof over your head is never a solid idea, especially if you only have one stream of income. Lose your job – and poof – there goes your house. But, so far, so good with the book.
It’s the next part that lost me. The author wants readers to pull out their equity and invest it into this wonderful, magical tax-free fund that will reap huge rewards, and produce it’s own sunshine and lollipops. (Ok, maybe not the last two.) Keep reading and you’ll find out that this wonderful mythical fund is nothing more than life insurance. The book did provide an interesting study into a theory I’m developing however.
Books that encourage readers to harvest equity and place it into a magical fund usually wait until the absolute last second to reveal it’s nothing more than life insurance. Slap a different title on any one of them and you basically have the same book. That pretty much blew the whole premise for me from that point on. The main problem is that there simply isn’t enough of a return to warrant risking the equity in your home.
Whenever you’re using debt leverage to create a new stream of income, you’ve got to make sure that the return is going to be worth the risk. Given that tax laws could change at any time for insurance funds, this is a hair raising prospect that any smart home owner should avoid – at least for now.
There are dozens of other ways to leverage debt into multiple streams of income and they don’t include life insurance funds. While there is some benefit to investing in these funds, it’s never a good idea to go whole hog. You’ve got to diversify. Any fifth grader that sat through a basic course on financial planning would understand that.
Overall, I cannot recommend this book. It unfortunately gets thrown in the pile with the numerous other books that all promise big returns and end up selling you life insurance – sort to speak.
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Book Review, Debt, Leverage, Money
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debt leverage, disappointment, insurance, investments, job, life insurance, marian, Money, poof, premise, rewards, subtitle, sunshine
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