borrow money for IRA contribution?

[silvor]

So after doing my taxes I realized my wife and I can contribute 10k ($5000 each) to a tax deductible IRA.

Thing is, I don't have all the money to do so. I have about $1000 cash and will get back about $2200 extra making the IRA contributions. So, I could take the $6800 from my HELOC.

I have no debt at all. No mortgage and nothing on the HELOC. I'd have the $6800 paid off by the end of 2013, if not sooner. The HELOC rate is 4.5%

Pro - 17.5% "return"

Con - not sure where to invest the money at this point. The market is at the highs. And it just seems wrong to borrow money for an IRA.

Any thoughts?

[elessar78]

Hell no. If you have no debt, why go into debt?

Where are you getting a 17.5% return? And you're not factoring in risk into the equation.

What if the markets go south, definitely plausible because we're hitting the highs and markets only tend to go down from high points? In that scenario, you'd be in debt, lost the money you'd pay it back with and have to pay interest.

[bjl584]

Pro = you could lose money by investing it.

Con = you will be going into debt

No. Don't do it. Save what you can. Essentially what you are doing is buying investments that you don't have the money to pay for. That's what options traders can get caught up in. Just save a comfortable amount and forget this idea.

[disneysteve]

I agree with the others. Never borrow money to invest.

Make sure to look at the big picture, though. What percentage of income are you investing for retirement? Your goal should be at least 15%. If you aren't doing that now, work on trimming expenses to free up enough money to get to that level (and/or boost income).

[Like2Plan]

So after doing my taxes I realized my wife and I can contribute 10k ($5000 each) to a tax deductible IRA.

Thing is, I don't have all the money to do so. I have about $1000 cash and will get back about $2200 extra making the IRA contributions. So, I could take the $6800 from my HELOC.

I have no debt at all. No mortgage and nothing on the HELOC. I'd have the $6800 paid off by the end of 2013, if not sooner. The HELOC rate is 4.5%

Pro - 17.5% "return"

Con - not sure where to invest the money at this point. The market is at the highs. And it just seems wrong to borrow money for an IRA.

Any thoughts?

Are you calculating your rate of return based on your higher income tax refund this year? The 17.5% amount may be flawed because your tax deductible IRA is only tax deferred. You could still have to pay taxes on it when you take the money out in retirement (depending on your income level).
No-I would not take a HELOC out to fund this--not even at a 0% rate. The only way I would take a loan to fund an IRA is if I could get one of those 0% same as cash for 12 month CC deals. (And, I wouldn't do that if there was a transaction fee). But, I would only do this if I was 150% sure I could pay it back within the prescribed time frame without making any sacrifices.
But, some questions do you have an emergency fund in place? How about your 2013 IRA--do you have a plan in place for funding it?