The Smith Manoeuvre sounds straightforward in theory, but what does it actually look like when you're doing it with your own money? This weekend I had a chance to have a follow-up conversation with Kyle (@kgcottawa) who similar to me has been implementing the Smith Manoeuvre. We each share an update on our Smith Manoeuvre portfolios and get into the practical details of how we're managing the strategy. We show our real numbers, talk about how much we've borrowed and invested, and discuss what's changed since our last conversation. Kyle's portfolio is approaching $192K, while my portfolio is around $243K, with roughly $143K in borrowing behind my Smith Manoeuvre investments. We also get into the mechanics that don't always get enough attention. How do we move money between our HELOCs and investment accounts? How do we handle the monthly interest, and when do we capitalize it? Kyle walks through his cash flow and mortgage prepayment routine, while I explain how I handle the interest slightly differently. We also discuss HELOC credit utilization, keeping the flow of funds clean, and why having enough financial breathing room matters when borrowing to invest. One of the more interesting parts of the conversation is Kyle's decision about whether to withdraw around $36,000 from his TFSA to make a larger mortgage prepayment. We discuss the emotional appeal of owing less on the house versus the potential long-term tax-free growth of leaving that money invested. We also compare our thinking around fixed versus variable mortgage rates, talk about the risks of leveraged investing, and share what we'd want someone to understand before getting started. If you're researching the Smith Manoeuvre, we also share some practical lessons and resources worth checking out, including Robinson Smith's book, Master Your Mortgage for Financial Freedom. This is an ongoing conversation about what we're learning as we implement the strategy, and we'll continue sharing updates as our portfolios and thinking evolve. 💬 We'd love to hear from you: Would you rather keep money invested in your TFSA or use it to pay down your mortgage faster? Let us know in the comments! ⚠️ Disclaimer: This video is for educational and entertainment purposes only and reflects our personal experiences and opinions. It is not financial, investment, mortgage, or tax advice. The Smith Manoeuvre involves leveraged investing and can magnify losses. Consider your own financial situation and consult qualified professionals before implementing a strategy like this. https://youtu.be/fHS8UllupIQ
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7 Comments
Mike L
@noviceadvisor · 14h
I would have done the smith but apparently the mortgage I have is shitty and even can't borrow against it with BMO
Kap @kap100 · 7h
@moementumfinance this is good but if you could some visuals with numbers (may be in slides ) will be more appreciated.
Michael
@mibay · 14h
Great video, u watched it but I don't think the aspect of paying the HELOC interest + principal was properly explilained. I had asked the question a few times on YouTube and didn't get a response. So here again, when you borrow against your HELOC to invest, besides being able to right off the interest on your taxes, how do you make sure you pay the HELOC interest + principal and also have to pay the mortgage because to me, looks like im owing in 2 different places
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