I did the Smith Manoeuvre successfully years ago. It probably took about 1.5-2 years off my mortgage. It is so fascinating the psychology of debt and leverage. How many that invest in real estate make large sums due to the massive leverage. Really enjoy these posts.
Weird. But everything has felt weird and scary on my journey. Often felt isolating as I was going with my judgement and mostly against the template I had. When I quit my job to go full time investing my family thought I was having some sort of mid lift crisis. lol.
Thanks for your thoughts on this. I have thought about it a couple times but have never ended up actually doing it and I am in a 40% plus tax bracket. One point to think about in your calculations is the tax you would pay on the $5,000 of dividends. I have not looked into it recently but then there are also preferred Canadian dividends versus US dividends where you get better tax treatment. So far I have only invested in registered accounts so haven't had to deal with it. Interested to know your thoughts. Thanks again.
Yeah, most canadian dividend payers are eligible dividends that get preferable tax treatment, especially over US dividends that have a withholding tax.
It's true that the dividends would increase your taxable income, but the interest expenses lower it, and I didn't account for that. I probably should have, just didn't think of it. Thanks for pointing that out. Would have to put that into calculations.
I did the Smith Manoeuvre successfully years ago. It probably took about 1.5-2 years off my mortgage. It is so fascinating the psychology of debt and leverage. How many that invest in real estate make large sums due to the massive leverage. Really enjoy these posts.
Glad you're enjoying them, I'm enjoying writing them. How did the Smith Manoeuvre feel to you? Comfy? Weird?
Weird. But everything has felt weird and scary on my journey. Often felt isolating as I was going with my judgement and mostly against the template I had. When I quit my job to go full time investing my family thought I was having some sort of mid lift crisis. lol.
Thanks for your thoughts on this. I have thought about it a couple times but have never ended up actually doing it and I am in a 40% plus tax bracket. One point to think about in your calculations is the tax you would pay on the $5,000 of dividends. I have not looked into it recently but then there are also preferred Canadian dividends versus US dividends where you get better tax treatment. So far I have only invested in registered accounts so haven't had to deal with it. Interested to know your thoughts. Thanks again.
Yeah, most canadian dividend payers are eligible dividends that get preferable tax treatment, especially over US dividends that have a withholding tax.
It's true that the dividends would increase your taxable income, but the interest expenses lower it, and I didn't account for that. I probably should have, just didn't think of it. Thanks for pointing that out. Would have to put that into calculations.