As you may or may not know, I am currently employing the SM (Smith Manoevre) on my mortgage and I’m very excited to do so. In my opinion, right now is a great time to invest.. and there is no better way to build wealth then by deploying a leveraged strategy using OPM (Other Peoples Money!). Again this is my opinion, and one which I know some agree with, and lots don’t agree with. However one thing is for sure.. I am going to try to make the best decisions with my own money better than anyone else, cuz no one else cares about it as much as I do!
That said, I was reading an older book.. from 1991 actually.. called ‘Wealth Without Risk for Canadians’ by Charles Givens and I came across a very interesting strategy in it.. #99 basically says (and I don’t have the book with me to direct quote), but “borrow money from the equity in your home to invest in stocks, mutual funds, even real estate.. and the borrowed money is tax deductible”. This is exactly what the SM states.. however this was written over 10 years before Fraser Smith released his book. Odd that Fraser Smith has been given credit for something that has been around for longer than 10 years eh?
Now being fair, I found Fraser Smiths book much more detailed on how to set up and employ the strategy, the tax tips, how to capitalize the interest in your Home Equity Line of Credit, etc. Basically it’s like taking the small blurb that Charles Givens wrote about, and expanding it and detailing it into an entire book.. and, for that matter.. and entire lifestyle as he now lectures and teaches about it. Crazy!
Speaking of the SM, I’m now in the process of trying to decide how I want to invest the equity of my home. I have a really good amount of money that’s sitting there doing nothing at the moment, and I don’t like that. Especially as I mentioned above, when I think now is the time to invest (for long term of course). So I’ve emailed my banker and I’m waiting for an email back. I want to set it up so that I automatically either transfer money out of the HELOC (home equity line of credit) to a broker for my own trading, or put it into a fund which I’ve researched enough and is looking good for future growth.
This is a hard decision to make… however I’m really starting to lean towards a brokerage, as I believe that I can not only beat what mutual funds can deliver, but also I have the ability to use hedging strategies like options. Another good point is that one of the good things about mutual funds is that they tell you what their markup is! So hypothetically, I could own pretty much the exact same stocks as all the top funds have.. and I can get that information for free! Ok, that’s it.. I just decided.. I’m doing this myself! 