HEQL vs XEQT: Is 25% Leverage Worth the Extra Cost
In episode 26 of Financial KarMoe, @karyungtom and I (Moe) tackle some of the recent questions from Blossom investment community, including whether a leveraged ETF like HEQL makes more sense than investing in XEQT and borrowing separately through a HELOC or portfolio line of credit. Is getting 25% more market exposure through HEQL worth the higher fees and borrowing costs? Kar shares his research into expected returns, volatility, fees and the trade-offs of using leverage in a registered account. I share a different perspective by comparing HEQL against my own experience with the Smith Manoeuvre and leveraged investing in XEQT, including the potential tax benefits of deductible investment interest. We also discuss why HEQL isn't "guaranteed" to outperform a standard all-in-one ETF, how future market returns affect the outcome, and why the right strategy depends on your risk tolerance and financial situation. We get into some important questions about investing on margin, managing margin calls, how much leverage is too much, and whether it's possible for a couple with modest incomes to build $1 million in their TFSAs through consistent investing. Beyond investing, we discuss whether adult children should contribute to household expenses, whether parents should open an in-trust account after maximizing their child's RESP contributions, splitting group gifts with friends, brokerage transfer promotions, and our thoughts on covered call ETFs. As always, we're sharing our own experiences and perspectives, not telling anyone what they should buy. There are plenty of ways to invest successfully, and the goal is to understand the costs, risks and trade-offs before deciding what works for you. 👇 We'd love to hear from you: Would you rather invest in XEQT and use leverage separately, or choose a leveraged ETF like HEQL? Let us know why in the comments! https://youtu.be/Z3jcQHhTRoA
Yes I was margin called. Only once for $500. I had to do some juggling to pay off a balance transfer and then decided to reinvest what was in cash right away instead of spreading it out. Then got hit with 3 red days in a row and ex-day lol. I covered the call before they notified me. I check my account like 6000 times a day just because I’m intrigued with how my assets react to news and other factors and knew it was coming the day before lol.
Canadian Investor@canadianinvestor · 2h
For people that choose to use leverage Mange your liiquidity. You don't want to let short term normal market drawsowns to turn into permanent losses. Thanks for the shout out and the margin video would be good. There is a big push to get people to use it across fintechs so we will see more and more people utilizing it.
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