When considering funding a second home, evaluate tax implications, cash flow, interest rates, and opportunity cost to determine whether to use cash or a mortgage.
Liquidating investments to buy a second home can incur significant taxes, especially from tax-deferred accounts or capital gains on stocks and mutual funds.
Preserving retirement assets is crucial, especially in uncertain financial times. Maintaining a safety net can safeguard against longevity risk and market fluctuations.
If mortgage interest rates are lower than your expected investment returns, using a mortgage could be the smarter financial decision despite the burden of debt.
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