[George]

I think it'd be a dumb idea all around. It is never a good thing, IMHO, to mix money relationships with familial relationships.

If anything goes wrong with the "loan", you risk souring the relationship with your parents. It's one thing if they're willing to give you the money as an early inheritance, but it's quite another if it's structured as a loan with an expectation of payback.

 

[George]

Look it's really simple. If don't borrow the money from your parents you will take a huge hit when interest rates increase substantially (will happen sooner than most think). If you borrow the money from them at 5% they'll be taking the hit when interest rates go up (missed returns).

I think it's a bit more complicated than that. You're only looking at the interest rates, and making the assumption that rates will jump. There are a whole host of social and emotional aspects to the situation that make it far more complex than you suggest.

 

[George]

George,

this is the Canadian Money Forum. we leave the pyscho babble to another forum. I am feel qualified as I am married to a psychotherapist. I am her biggest project yet!

If the OP was not scared off from the social and emotional aspects of this type of loan, then they are probably ignorant or just inconsiderate of their parents.

then there are the personal issues of self confidence, independence, etc. let alone why their parents don't think they can get more than 5% on the investment anyway...

I think my point stands. Borrowing money from family members puts the family relationship at risk, particularly if the loan isn't paid back. It makes family gatherings into awkward events.

There's more to it than just looking at the money and interest rate differentials. Yes, this is the Canadian Money Forum, but the "personal" aspect of personal finance is as important as the "finance" aspect (if not moreso).