The problem with option 2 is that it doesn't take into account risk. You need a much higher and more secure place for a return to alleviate risk. Similar to what others said most people are taking out loans for things that they don't have the cash for. They aren't taking out the loan at a low interest rate so they can invest their cash somewhere else. But they are told, take the cheap money and invest elsewhere. They just forget to do that last part.