So, we've been talking about doing these Smith Manoeuvre conversations more regularly, where Kyle (@kgcottawa) and I get together, review our SM portfolio, share how we are investing in it and how we document the steps for tax time, talk about lessons we've learned, and answer questions from other investors. There was just one small problem... we hadn't figured out what to call this series!!! Well, not anymore! Welcome to " The Smith Manoeuvre Unlocked" series with Kyle and Moe! We had two of these episodes before (albeit without a formal series name), so technically this is our episode 3! This time we're answering questions from the Blossom community. But first, we kick things off with an update on our own portfolios and how things are looking after the recent market movements. I share my re-advanceable mortgage renewal at 3-year fixed with a rate of 4.49% (I mistakenly mentioned 4.69% while recording oops!), my latest Smith Manoeuvre portfolio update which is sitting at approximately $246,000, against around $147,000 in total borrowing. Kyle also walks through his portfolio, now approaching $197,000, with net deposits of approximately $165,000. We discuss the growth we've experienced, the cost of borrowing, and why it's important to look beyond the headline portfolio gains when evaluating a leveraged investing strategy. One of the questions we explore is how much available HELOC room you should leave unused. Kyle prefers maintaining a larger buffer, while I've historically run my HELOC much closer to its limit. We discuss what changed my thinking, why having access to available credit can matter, and how your personal circumstances and risk tolerance should influence the amount you borrow. We also talk about the pros and cons of capitalizing HELOC interest, how quickly interest can compound, what happens when you become uncomfortable with the debt, and whether certain investments actually qualify for the strategy from a tax perspective. We also discuss why keeping a clean paper trail, understanding the CRA requirements, and getting professional advice are so important. Another interesting part of our conversation is whether the Smith Manoeuvre makes sense for everyone. We talk about people who don't yet have enough home equity, those who are uncomfortable with debt, and whether someone approaching retirement should even consider implementing the strategy. Kyle also shares how he approached the conversation with his wife, why having your spouse on board matters, and how he thinks about the risks of leveraged investing as a father of three. This is exactly what we want "The Smith Manoeuvre Unlocked" to be about: sharing our actual experiences, discussing the mechanics, learning from each other, and answering questions from investors who are either considering the strategy or already implementing it. We're not claiming to have all the answers, but hopefully our experiences can help you think through some of the important considerations. 💬 Question for you: What's the biggest thing holding you back from implementing the Smith Manoeuvre: fear of making a mistake, being uncomfortable with debt, not having enough home equity, or something else? Head over to Kyle's poll on Blossom and share you response there. A huge thank you to @canadianinvestor , @timeagent , @reachjay for your interactions on Kyle's post and excellent questions which we covered in the episode. ⚠️ 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. Leveraged investing involves significant risks and can magnify losses. The tax treatment of borrowed money depends on the specific circumstances and applicable CRA rules. Consider consulting qualified professionals before implementing the Smith Manoeuvre. https://www.youtube.com/watch?v=Cts47gJm-XI
634 views
3 Comments
Tanvir @tanvirmk · 3h
I have just switch my mortgage to scotia to implement SM. I have a lot of learning to do. Is keeping paper trail for CRA possible audit complicated?
See the full comment section 👀Sign up for the full Blossom experience!
