Adventures in Borrowing To Invest - Part 2 - +28.5%

DISCLAIMER: THIS IS NOT FINANCIAL ADVICE! NEVER BORROW MONEY TO INVEST, ESPECIALLY IN CRYPTO.

With that out of the way, on to the main event!

I originally posted here about a month ago with the original plan (outlined again below). I'm a crypto guy with a your average stock investments/portfolio on the side. I don't hang out in r/wallstreetbets, and I don't want to do anything that crazy. I just want to capitalize on the next crypto bull run.

I'm not suggesting that anyone else follow this plan, but it's within our risk tolerance for the following reasons:

- The total amount I'm borrowing (~$54k) is a relatively small percentage of our total net worth, but enough to be worth it.

- We already have a fairly diversified and safe portfolio, as well as steady income.

- We have no other foreseeable need for credit, especially considering we now have a HELOC, but we're saving my wife's perfectly good credit score (~800) just in case it is needed.

- If this fails completely, we can afford to pay it all off at the end of the first 18 months of 0% APR.

- We're timing the market cycle with the expected bull run, and are investing in assets that should pay off very well.

The main reason we've chosen to borrow for these investments is that it's easier to borrow the money than it is to get it out of our other investment vehicles, and we don't want to dip into our emergency fund. I'd rather borrow it now and be able to spend a large chunk of it in a few years, rather than pay fees to get it out of Roth or 401k. And I don't want to do these speculative investments inside of those either, because it's harder to get the funds out afterward. Our liquid cash is still lower than I'd prefer (after having just bought a house and a car), but that should fill back up from normal W-2 income fairly quickly. I wanted to invest at the bottom of the bear market without having to wipe out our emergency fund, and this was the easiest way to do it.

So, here's the plan, and where we're at:

1. Get HELOC. -Check.
2. Apply for as many 18+ month balance transfer cards as possible, all at once. -Check.
3. Max out the HELOC, move cash to a checking account for later investing. -Check.
4. Use balance transfer(s) to pay off the HELOC, paying the 3% fee in the same transaction. -Check.
5. Rinse/repeat until the cards (except maybe one) are maxed out. -One card left to balance transfer.
6. Borrow money from the HELOC to pay the minimum payments on the cards and HELOC each month. Leave enough in the checking account to make the minimum payments every month, all on auto pay.
7. Use the HELOC to maintain some balance in the attached checking account, pay it down with a balance transfer to the last card.
8. Wait ~18 months. Rinse/repeat and load to new cards as needed.
9. Borrow from Peter to pay Paul until the cows come home.
10. Hopefully get 10x to 20x returns over the next 3-4 years.

Balance transfers take about two weeks to go through, and they generally are applying directly toward the HELOC rather than going into the checking account (though a few of them have gotten deposited there, which works too). This means that I couldn't simultaneously initiate balance transfers that are greater than the amount owed on the HELOC without risking overpaying the HELOC and raising a bunch of red flags, which means that it takes a bit of time to get all of the funding, but I'm most of the way there now.

I've been keeping track of what cards I applied for, what limits I've been given, what the fees have added up to, and when I've transferred balances.

Credit card spreadsheet

As the balance transfers have been coming in, I've been moving money over to Binance and Ally, and buying the good stuff. So far I've bought 1.1 BTC and 2 ETH, but I've also invested in a number of crypto-related stocks and tech stocks. I'm going to move the crypto out of Binance and into a wallet once I'm done buying, and then will HODL through the bull run. As of today (about a month after the first buys), I'm up about $10k or 28.55% all of the investments, but a few days ago it was in the $12k range.

Buy and Gain/Loss Spreadsheet. Using calls to GoogleFinance to get current prices.

You guys don't care about spreadsheets though. You want to see the receipts.

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2 ETH in Binance

1.1 BTC in Binance

My holdings on Ally that I've bought with these funds. Lotta green so far.

Bought more SI the day before it's big spike, should have bought even more!

In the next two weeks I expect to have the last of the balance transfers done, the HELOC paid off, have about $50k invested, and the other ~$4k sitting in the checking account to pay the minimum payments on the credit cards. The remaining wildcard is what those minimum payments will be, as there hasn't been enough time for statements to be generated on all of the cards yet. The ones that have generated statements so far are asking for less than $50/mo for minimum payments. If any cards need more than that, I'll either have to hold more in the checking account, or just make some of the payments out of our regular income. Just for the sake of the experiment, I'd like to keep this as compartmentalized as possible (aside from the initial $100 I deposited into the checking acct, and the $20/paycheck direct deposit that I have set up to keep me from getting any fees for the checking account).

If anyone has any doubt about the validity of using a bunch of credit card balance transfers to pay off a HELOC, here ya go.

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\"Advance line check\" is a move from the HELOC to the checking acct. The balance transfers coming in have been automatically applied to the principal.

https://preview.redd.it/z5qkm928m8ga1.jpg?1080&format=pjpg&auto=webp&s=432522d31e196d62867a73a7b0f3410ef2d892cd

As expected, it's been pretty rough on the credit score, and I'm fully expecting it to get worse as I finish the last of the balance transfers and they have enough time to actually hit my credit score. That said, once I pay off the cards when I sell, my credit score should recover pretty quickly. Here's what Experian has to say about the last year.

Was at 800 in July, down to 686 now. I won't be surprised if I hit 600 within the next 2 months.

So. I'm up ~30% in the first month in. Did my intentional timing of the market cycle work, or did I just get lucky? Will I lose it all in the next month or two? Am I an idiot, or have I found a gold mine? Only time will tell.

I'll be interested to hear what you guys think. Feel free to comment on or criticize my strategy, just know that I'm not encouraging anyone else to borrow or to invest money they can't afford to lose.

I'll continue to make regular updates/posts about this experiment/adventure every month or two.