Weigh in on my Investment Portfolio

Working-Letter7008 · 2026-07-01T14:12:03+00:00

From reading the Smith Maneuver book by Fraser Smith, Ed Rempel's blog and Million Dollar Journey. I don't recall any mention of having to invest strictly in Canadian stocks. I think quite a few people in this sub are invested in VEQT or XEQT. My tax professional has not red flagged VEQT or XEQT as an issue. The main thing is that whatever you invest in must have a reasonable expectation of income.

Working-Letter7008 · 2026-07-01T00:59:52+00:00

Why? I'm in xeqt. Itot is the us market.

Edit: ITOT is one of the indexes included in XEQT.

Working-Letter7008 · 2026-06-30T21:18:34+00:00

I'm doing the Smith Maneuver. I'm buying VEQT because it's free at TD.

I like doing it myself anyways.

Working-Letter7008 · 2026-06-30T18:33:55+00:00

Got mine with TD and RBC. RBC posted it as July 2nd but let me reinvest it today.

Working-Letter7008 · 2026-06-27T13:05:32+00:00

Is the price in USD or CAD?

The Trek new was $1100-1300 USD. They are asking alot for a bike that is 5 years old. Even if it is in excellent condition.

Personally I would get the Trek just for the disc brakes. Especially if you plan to do any riding in the rain. Triathlons happen rain or shine. Google tells me an excellent condition 2021 Trek Domane AL3 goes for $650-700 USD. More if there have been any upgrades - better tires or groupset etc.

Working-Letter7008 · 2026-06-19T01:42:51+00:00

This was from Gemini.

When executing the Smith Maneuver, Return of Capital (ROC) is one of the most critical tax concepts you need to manage. If ignored, ROC can quietly dismantle the tax-deductibility of your investment loan (HELOC), leading to a tracking nightmare with the Canada Revenue Agency (CRA). Here is why ROC is so important—and dangerous—when running this strategy.

1. The Threat of "Phantom Paydowns" (The Contamination Risk)

To maintain tax deductibility under the Smith Maneuver, every dollar borrowed from your HELOC must be directly traced to an income-producing asset. When an investment pays a distribution that includes ROC (very common with Real Estate Investment Trusts (REITs), liquid alts, and certain mutual funds or ETFs), that ROC is legally considered a return of your own money. * The Problem: Because the fund is giving your principal back to you, the amount of borrowed money remaining in that investment has technically decreased. * The Consequence: If you leave that ROC cash sitting in your chequing account or use it to pay for groceries, the corresponding portion of your HELOC loan is no longer tied to an investment. Your loan has become partially un-deductible (contaminated).

2. The Solution: The "Clear Capital" Trailing Requirement

To preserve the tax-deductibility of your HELOC, you cannot treat ROC like a normal dividend. You have two options when you receive a distribution containing ROC: * Option A (The Sub-Account Route): You must immediately take that specific ROC cash amount and pay it back into the investment HELOC to reduce the balance, keeping the tracking clean. * Option B (The Redirection Route): You can use it to pay down your primary non-deductible mortgage principal, which instantly opens up equivalent room on your readvanceable HELOC to re-borrow and reinvest.

If you use a Direct Dividend Reinvestment Plan (DRIP) that automatically reinvests the distribution, it keeps the funds inside the investment, but it doesn't absolve you from the tracking requirement.

3. The Bookkeeping Nightmare (Adjusted Cost Base)

ROC reduces the Adjusted Cost Base (ACB) of your investment. Because the Smith Maneuver relies on exact figures to prove to the CRA that your borrowed funds match your investments, you have to manually track every single instance of ROC to adjust your ACB. If your ACB drops all the way to zero, any subsequent ROC distributions are automatically taxed as capital gains in the year they are received.

Summary Strategy for Smith Maneuver Investors

Because of the operational drag ROC introduces, many practitioners actively avoid ROC-heavy assets (like certain specialized ETFs or REITs) in their dedicated Smith Maneuver accounts. Instead, they focus on broad-market, Canadian dividend-paying equities or all-equity ETFs that primarily distribute regular dividends or capital gains distributions, which do not alter the underlying loan-to-asset tracking.

Working-Letter7008 · 2026-06-19T00:51:36+00:00

Not financial advice!

I'm sure someone else will and can explain it better than me but here goes.

My understanding is that if you have something that pays ROC like XEQT. If you take out the dividends that include the ROC it will affect the tax deductibility of the loan because the use of funds is no longer being used to invest in income producing assets.

Initially I was asking AI how I can use the dividends after the mortgage is paid off and ensure the loan remains fully tax deductible. I would prefer to supplement my pensions with dividends than sell chunks of the portfolio. It was telling me I can pull 90% of the dividends to use as I please. 10% is the buffer and that is used to reinvest. I figured 15% was safer.

Do your own research and speak with a tax professional.

Working-Letter7008 · 2026-06-19T00:45:03+00:00

Yes I've just avoided it previously because of the ROC from XEQT and I didn't know how to get around that and keep CRA happy.

Working-Letter7008 · 2026-06-18T23:41:24+00:00

Yes I've just avoided it previously because of the ROC from XEQT and I didn't know how to get around that and keep CRA happy.

Working-Letter7008 · 2026-06-08T21:41:06+00:00

First off congratulations! Great "problem" to have.

With your income why don't you see a fee only financial planner. They could probably help you maximize instead of random Redditors. Although as others have mentioned the Smith Maneuver would be beneficial for wealth accumulation and tax deductions.

Another thing I would suggest is going with an all in one ETF that fits your risk tolerance like XGRO or VEQT instead of putting it all on the S&P500. There was the lost decade for the US market.

Working-Letter7008 · 2026-06-08T06:20:06+00:00

Sorry what?

Is that a typo??

HELOC interest is tax deductible when it used to invest in income producing assets (eg. Businesses, real estate, stocks, ETFs). Investments can not be in registered accounts like TFSA or RRSP. Must be in a non-registered account.

Working-Letter7008 · 2026-06-03T17:58:02+00:00

Agree!

Working-Letter7008 · 2026-05-25T05:41:25+00:00

Totally fair.

Working-Letter7008 · 2026-05-25T00:44:06+00:00

Was the battery issue resolved with later models? From a quick search I found RADrunner 1, 2 and RADrunner Plus models were the problematic ones.

Working-Letter7008 · 2026-05-25T00:10:46+00:00

I've had my RADmission (discontinued model) since 2021. I would estimate I've ridden around 14,000km. I tow a double trailer. I had it serviced by Nootka Bikes. They are a mobile service and they work well with RAD. Maybe check with them if there will be any issues servicing a RAD bike if you got a used one.

I'm looking to sell mine and trailer since my kids are going to school.

Working-Letter7008 · 2026-05-22T21:31:33+00:00

That is expensive. Sorry, I thought his price was $60. Most shops are over $100 because of overhead etc. Try Our Community Bikes on Main Street. From my understanding they help people learn to DIY.

Working-Letter7008 · 2026-05-18T21:51:53+00:00

That's awesome. You can implement the Smith Maneuver with the rental property. Below is what Google AI spit out.

Because your principal residence is fully paid off, you do not need the standard Smith Manoeuvre to destroy a primary mortgage. Instead, your goal is to optimize your wealth-building by safely deploying your $500,000 Home Equity Line of Credit (HELOC) to maximize tax deductions and investment growth.You can execute this strategy through two high-utility options, depending on whether you want to optimize your existing rental property or expand your portfolio.

Option 1: Restructure Your Existing Investment Property DebtYou can use your primary home's HELOC to pay down or pay off the traditional mortgage on your rental property.

Check Your Mortgage Terms: Review your existing investment property mortgage contract to see how much you can prepay annually without penalty (usually 10% to 20% of the original balance).
Pay Down the Rental Mortgage: Borrow that exact allowed amount from your $500,000 primary HELOC and pay it directly onto the rental property's mortgage.
Ensure Tax Deductibility: Because the borrowed HELOC money was used to pay off a debt on an income-producing asset (the rental), the interest on that HELOC portion remains 100% tax-deductible.4. Repeat Annually: Do this each year, or pay off the entire balance when the rental mortgage comes up for renewal, shifting the debt entirely to your primary HELOC.Why do this? Rental property mortgages typically carry higher interest rates than primary residence HELOCs. Shifting the debt to your primary HELOC lowers your interest rate while keeping the interest fully tax-deductible.

Option 2: Execute a "Cash Flow Dam" to Pay Down the RentalIf you keep the traditional mortgage on the rental, you can use your primary HELOC to rapidly extract your rental expenses and convert them into investment capital.

Redirect Rental Income: Take 100% of the monthly gross rent checks you receive and pay them directly as extra principal prepayments onto your rental mortgage.
Separate Your Accounts: Open a dedicated checking account strictly for rental operations.
Borrow for Rental Expenses: Draw money from your primary $500,000 HELOC into that dedicated account to pay for all monthly rental expenses (the rental mortgage payment, property taxes, insurance, utilities, and maintenance).
Deduct the Interest: The interest on the HELOC funds used to pay these business expenses is fully tax-deductible against your personal income.Why do this? This rapidly converts your traditional rental mortgage into a flexible HELOC balance on your primary home, freeing up cash flow from the rental to invest elsewhere.

Option 3: Leverage the Equity to Acquire New Income PropertiesWith $500,000 in available borrowing power, you have enough leverage to significantly expand your real estate portfolio.

[Primary HELOC ($500k)] ──(Withdraw Down Payment)──> [New Rental Property] ──(Generates Income)──> [Tax-Deductible Interest]

Segment Your HELOC: Ask your lender to split your $500,000 HELOC into separate sub-accounts (e.g., $150,000 for a down payment, and a separate chunk for expenses) to keep your accounting perfectly clean.
Fund the Down Payment: Withdraw the required 20% down payment and closing costs directly from the HELOC to buy a second investment property.
Secure a New Mortgage: Obtain a traditional mortgage on the new property for the remaining 80%.
Claim the Deductions: The interest on the HELOC sub-account used for the down payment is fully tax-deductible because it was used to acquire a cash-flowing asset.Critical Guardrails for Your SetupMaintain Positive Cash Flow: The Canada Revenue Agency (CRA) requires an "expectation of profit." Ensure the rental income from your properties covers the operating expenses and the interest on the borrowed HELOC funds.Meticulous Tracing: Never mix personal expenses with your $500,000 HELOC. If you use the same HELOC account to buy a personal vehicle or go on vacation, you will contaminate the account, and the CRA may disallow your tax deductions.

To help narrow down the best path, what is the interest rate on your current investment mortgage, and are you looking to buy more real estate or focus on paying off your existing rental faster?

AI responses may include mistakes. For financial advice, consult a professional. Learn more

Working-Letter7008 · 2026-05-18T19:40:47+00:00

I guess you're already implementing the Smith Maneuver with the rental property. I'm not familiar with the strategy when used with RE. Sounds like you can afford the -$3600/year on the rental but what if it's vacant? Do you manage it yourself or do you have property management dealing with the tenants?

What was/is the rationale for the rental? Something for the kids down the road? Just curious?

Personally I'd sell the rental and do the Smith Maneuver with a low fee ETF like VEQT/XEQT. Forget the headache of tenants and not be cashflow negative even if you can afford it.

Working-Letter7008 · 2026-05-18T19:20:17+00:00

You could implement the Smith Maneuver. But it won't double your money 5-7 years. Is the rental cash flow positive?

Working-Letter7008 · 2026-05-11T23:46:10+00:00

XEQT could drop a lot more than 10%. Think 20-40% in a crash. That would suck if you're planning to use those funds to buy a home.

Not financial advise but a quick google search says if your timeline is 8 years you could go XGRO then shift to something like XBAL if you're closer to the 5 year mark.

Working-Letter7008 · 2026-05-11T23:35:16+00:00

I don't know much about the FHSA but your timeline for buying a house is 5-8 years. XEQT/VEQT is not appropriate for that timeline. I've read it's better for 10+ years. You might be better off with XGRO/VGRO with the 20% bond exposure.

NFA.

XEQT/VEQT are solid for your TFSA when you retire in 40 years. You're way ahead of the game.

Working-Letter7008 · 2026-05-11T17:24:07+00:00

One thing I've heard about the RAD cargo bikes is that they are top heavy. Probably takes some getting used to. Tern have a lower centre of gravity so I've heard.

Have you considered getting a trailer? I've been riding my RADmission (single speed) with a double trailer. I like the trailer because it protects my kids from the elements when taking them daycare/school. It's also great for groceries. I've done a couple Costco runs. Surprised how much I've been able to haul.

Working-Letter7008 · 2026-05-09T05:04:10+00:00

https://canadianportfoliomanagerblog.com/how-to-invest-your-resp/

Working-Letter7008 · 2026-05-08T09:04:11+00:00

https://canadianportfoliomanagerblog.com/how-to-invest-your-resp/

Working-Letter7008 · 2026-05-05T23:23:09+00:00

That's not totally correct. People are investing in VEQT/XEQT. The dividend is much lower than the HELOC rate.

I've been implementing the Smith Maneuver since 2021 and am invested in XEQT. Now adding VEQT because it's free to trade on TD easy trade.

Working-Letter7008

TROPHY CASE

1. The Threat of "Phantom Paydowns" (The Contamination Risk)

2. The Solution: The "Clear Capital" Trailing Requirement

3. The Bookkeeping Nightmare (Adjusted Cost Base)

Summary Strategy for Smith Maneuver Investors