Here’s an enticing strategy: Borrow money at today’s low interest rates, then invest it at a higher return, pocketing the difference.

Sound like a no-sweat road to riches?

Sure. And growing numbers of Americans are being seduced by this siren song of easy money, borrowing against their homes to buy stocks, apparently oblivious to the steep risks.

So alarming is the trend that the National Association of Securities Dealers recently warned its members they can run afoul of brokerage-industry regulations by urging the borrowing strategy on small investors.

The maneuver involves taking cash, or “equity,” out of a home by refinancing with a new mortgage larger than the amount owed on the old one, or by taking a home-equity loan, using the property as collateral.

Equity is the difference between a home’s value and the debt remaining on the mortgage — essentially, the profit you could make if you sold the property.

The borrowed cash is then used to buy stocks or other investments, in hopes that the investment return would be greater than the interest rate on the loan.

The danger is that the investment may lose money instead of making it. Worst of all, homeowners burdened with additional debt can fall behind on payments and lose their homes.

Turn for worse

The NASD warning offered a startling fact: Homeowners appear even more likely to use home equity to pay for stock purchases today than they were during the stock bubble of the late ’90s.

Citing a Federal Reserve study, the association said that in the bear market of 2001 and the first half of 2002, the most recent period examined, 11 percent of the cash that homeowners obtained through refinancings was used to buy securities. That compares to just 2 percent in 1998 and the first half of 1999, when stocks were booming.

The association believes the practice has grown since that study was done.

Moreover, the amount of this borrowed home-equity money used for investments — an average of $24,000 — was more than most other purposes.

You’d expect the opposite: After the stock bubble burst in 2000, investors should have become more sensible.

The NASD is concerned that some stockbrokers are part of the problem, by urging investors to tap home equity to execute trades that, in turn, generate brokerage commissions.

Obviously, low interest rates and rising home prices also are factors, making it easy for homeowners to pull cash out of their properties.

A homeowner who could borrow money at a fixed rate of, say, 6 percent and invest the proceeds at a 10 percent return would make a 4-point profit. By taking out a home-equity line of credit, instead of a fixed-rate loan, the interest rate may be slashed another 2 or 3 percentage points, boosting the profit.

The downfall

But what works so neatly on paper may not work in practice. Although stocks have produced annual returns averaging 10 to 11 percent since the Depression, they also can suffer prolonged downturns.

Also, rates on equity lines of credit move up or down as prevailing rates change. The 3 or 4 percent rate that looks so good today quickly could rise, turning any potential profit from the maneuver into a loss.

The worst case would be if your home price falls. You could end up owing more than your home is worth and not make enough on the home-financed investment to pay the difference.

The risk of falling prices may be particularly acute now, as rising interest rates make it harder for buyers to borrow big sums.

Don’t get me wrong: I have nothing against refinancing, if used sensibly. Clearly, it makes sense to replace an older mortgage with a new one carrying a lower interest rate.

Under certain circumstances, it’s worthwhile to use a refinancing or home-equity loan to get at cash that otherwise would be locked up in the home. But I’d generally limit that to emergencies or essentials, such as paying a child’s college costs or improving the home to maximize its value.

After the housing boom of the past few years, many homeowners have lots of money tied up in their homes. But that’s a good place to keep it. Home equity is a good way to diversify your “investments,” helping to counterbalance the risks you face with stocks and other investments.

And you’re always going to need a place to live. The money tied up in your current home will be a valuable asset when you’re ready to buy the next one.

So don’t blow it in the stock market.