Bonds and Loans = Win?

[battlebot]

So I had this idea today. Borrow X amount of dollars in a loan ie: 3 mill, then go out and purchase 3 million dollars worth of EE bonds. After paying off the three million including interest in a lump sum after 10 years if possible, wouldn't that make you a millionaire in 10 years due to the doubling of the EE bonds?

[chrish]

I started to answer this but changed my mind.

Bot:

SMACK

bad idea.

[Haul Asp]

Who would loan you 3 million?

[battlebot]

Startup business loan?

Dunno

[chrish]

Bot's Business Plan:

You give me $3,000,000. Don't charge me any interest. I'll pay you back in 10 years - all $3,000,000.

Well, it's really not that much wackier than some dot coms' plans.

It's a new type of business. The dot dot dot Bot.

[Recoil]

The bank is going to charge you interest --- probably more interest than what a bond is going to gain yearly.

IE: loan interest may be 9% [am guessing there is a premium for a loan that big]

You "may" make 3%/year off a bond. Bonds are generally "safe" plays so they don't pay a high yield.

[chrish]

At 9% interest compounded monthly with no principal or interest payments being made for 120 months, at the end of the term you'd owe:

$7,354,071.23

BTW - to buy $3,000,000 in EE bonds, I'm pretty sure it would only cost you $1,500,000. When mature (10 years) they're worth $3,000,000. So running the numbers for that loan would mean you'd owe:

$3,677,035.62


Need another spatula smack?

[Haul Asp]

Just that your lucky stars that we are here to help advise you.