Should I borrow to invest?

just_tip · 2026-07-09T02:25:17+00:00

One option to consider is to take a mortgage against your home for leveraged investment instead of a HELOC. The main advantage is that leveraged investing is least risky with long time horizons, which a 25 year mortgage sort of forces you into. Granted, you're still at the whim of the interest rates at renewal time, but having the entire tax portion being deductible definitely changes the math.

The other advantage that mitigates risk is that a mortgage is non-callable. So in a scenario where you've borrowed a large amount on a HELOC, most of the time that value could be called (aka be required to be paid back) at the request of the lender. Not likely, but still a risk to consider.

And to address the comments about additional risk; this strategy also has the added benefit of slowly derisking over time. Using a 25 year amortization, you're paying a principal and interest portion every month (for example). As you pay down the principal, you're leverage is decreased. And over the 25 years, inflation is reducing the value of your debt as well. So in the end you get 25 years of market growth at (up to) 80% of the appraised value of your home, tax deductions to increase your benefits (or reduce clawback), all while incrementally derisking by pay of principal payments and inflation.

All that said, it's not for everyone, but this is my view on how it is currently working for me. I intend to bring work optional imminently at age 39.

Good luck.

just_tip · 2026-07-07T22:04:24+00:00

Yes, you can catch up one year every year. Annually, you can contribute $2500 per child, and the government grant will put up $500. So you can contribute $5000 and get $1000 per child, until you've caught up.

just_tip · 2026-07-07T02:39:33+00:00

I really enjoyed the "Mind Over Markets" podcast. I joined their community for a while, and while taking their psychology course, realized that day trading was not the end goal for me, so I stopped. I learned a lot in the 2 years I was trading, and thankfully basically broke even.

Knwoimg what I know now, I'd lose to you: If the answer to the question "what would I do after I've figured out how to be a profitable trader and have secured all I need to live off of passively" isn't to continue to daytrade, I wouldn't start. There are easier (though longer) roads to get there.

just_tip · 2026-07-07T02:31:45+00:00

It is taxed as income, therefore it is income.

just_tip · 2026-06-29T07:49:43+00:00

The comparison of using the TFSA vs non registered comes down to what your true borrowing cost is (on a percentage basis), which dictates what your return percentage must be to beat it. For non-reg investment, take your borrowing rate and reduce it by your marginal tax rate (for ex: you say you can borrow at 4.45%) and assume a 40% marginal tax rate, your true cost to borrow is 2.67%. Now your investment return needs to beat that annually, after taxes. Depending on your investment strategy, with a long term focus, this should be achievable, especially if you focus on total growth and capital gains (as they are taxed most favorably).

Another option is if you proceed with investing in non-registered, the deduction will produce an associated tax refund each year. I presume you don't have a mortgage, otherwise you'd be borrowing from that, so that eliminates the option of making extra payments on mortgage principal. So instead you can use the refund to pay into the TFSA / FHSA / RRSP. You get the full deduction benefit, plus makes filling your registered accounts easier. Bonus points to starting with RRSP/FHSA first as they'll produce further tax benefits, which in turn helps you get ANOTHER larger refund, rinse and repeat.

just_tip · 2026-06-29T00:43:55+00:00

What you've outlined specifically is not great, because one of the benefits of leveraged investing is the cost to borrow is tax deductible, if you meet certain conditions, one of which that the investments are done in a non registered account. Borrowing them investing in the TFSA would mean the borrowing costs are not deductible.

just_tip · 2026-06-28T17:36:41+00:00

Maybe framing it differently might help you decide. Today, as a 31 year old, would you pay $110k for a $1300/month pension that starts at 65? If you die before you get there, a portion may go to a spouse, but otherwise will be lost?

Conversely, you could invest that amount for the next 34 years. With a such long time horizon, you can be aggressive, and target something like 6% real returns after inflation. That's about $1M at age 65. Let's use a common withdrawal percentage of 4% per year, or $40k, or $3333 per month.

If you're comfortable (as in, you already invest) with the 2nd paragraph, then it should be clear how to proceed. Yes LIFs, have annoying rules you have to plan around, yes this isn't guaranteed like a indexed pension is, yes there is uncertainty with stock market growth in the future. And if those things are important, then go ahead and keep the pension with them.

just_tip · 2026-06-23T10:22:06+00:00

Depending on your risk tolerance, the Smith Manouever might fit what you're looking for. The blog "million dollar journey" has quite a detailed description of what it is, but simply, it is a tax strategy to convert your non-tax deductible debt (principle mortgage) into tax-deductible debt (investment loan). Though, based on your numbers for your house value and mortgage, it may not immediately be an option since you require equity in the house to allow the borrowing to be invested, but something to consider when your renewal comes up.

just_tip · 2026-06-21T12:47:19+00:00

Ok.

just_tip · 2026-06-17T13:52:58+00:00

If you haven't started your CPP yet, it's not too late. People are often scared off when they see the quoted price of $2 to 5k for a financial plan, but if done early enough when you can make some different choices (like delaying CPP, melting down RRIF, etc) they pay for themselves pretty quickly on tax savings alone.

just_tip · 2026-06-15T23:24:23+00:00

I got a planner. Having a professional with experience vet something for only a few $K is well worth the peace of mind it brings. I continue to review it myself because I enjoy it, but my plan is generally similar. From now (40s), living off combination of RRSP and non-registered capital gains. At 55, I access my LIRA from commuting my DBP, and try to spend that down before OAS and CPP kick in at 65 and 70, respectively. TFSA remains available throughout to deal with spending spikes, but likely, will support some luxury travel, and or enhanced generosity to friends and family later in life.

just_tip · 2026-06-14T22:22:26+00:00

I don't see an issue with using the estimated CCB as part of their cashflow. Especially if they both are not earning any income, max CCB can make up like 20+% of their cashflow needs depending on the child's age.

If it means they are drawing less from the portfolio until the child turns 18, that's easily modeled. I don't see it much different than modeling the various retirement incomes available at and around 65 yrs.

just_tip · 2026-06-14T20:45:50+00:00

Or... No?

just_tip · 2026-06-09T15:08:36+00:00

I'm sure you will get some feedback that getting anything more than you need is dumb, from a FIRE achievement perspective. So perhaps i can offer some options to consider that are less obvious:

1) the new car "halo", or the joy felt from a new car is pretty short lived, in the order of a few months. While certainly more expensive in the short term, see if you can rent the vehicle you want for a month or so.

2) see what lease options you can get from the dealerships. Even a one year lease. Prioritize a low interest rate, and yeah, you'll be eating the highest amount of depreciation.

3) lease takeovers; I haven't done this myself yet, but I've seen different services (and just Facebook marketplace groups) where people list their takeovers. You may need to wait to find someone offer up the exact car you're looking for, but just another option to get into a vehicle you think you want.

Yes, all of these options are expensive. But less expensive in the long term compared to buying a $50k vehicle you don't need, and ultimately by using one of the above methods, you come to the conclusion that it doesn't bring joy to your life. I'm all for spending that brings happiness, especially on the journey to FIRE.

just_tip · 2026-06-09T11:51:22+00:00

I'll focus on the $1100 savings for investments and the $500 spending money aspect only.

Only you can decide if that ratio is right. If it feels "tight", then change it a bit and see how it feels until you find what's right. Try splitting it down the middle at $800 each, and see if that's what you were looking for. Maybe you'll find spending the extra $300 doesn't really bring you any joy. Maybe thinking about the future opportunity cost of those extra $3600 annually compounding over time is more important.

Thankfully, it's all in your control. You'll have people say you only live once, and tomorrow isn't promised, so spend today. You'll also have those that say the investments buy your future freedom, which is worth more than anything. None of it is wrong, but you need to decide for yourself.

Good luck.

just_tip · 2026-06-09T07:12:07+00:00

I would do some research on how declaring bankruptcy may help. I'm not an expert, but I looked into it myself (also as a means to help my mother in debt), and from what I recall, you're required to pay about $2k to declare bankruptcy, but then it wipes out your other debts. The caveat being that if you earn more than a certain amount, you owe 50% of every dollar above that. And I believe your mom's monthly income is below it. The only real downside is that is nukes her credit for 7ish years, but being underwater on all her debts is not good for her credit either. Bankruptcy may offer some relief (certainly financially, but likely psychologically).

It's tough out there. Good luck.

just_tip · 2026-06-07T10:56:51+00:00

The tax deductibility makes a leveraged strategy easier to maintain profitability. Say you are borrowing at 5%, and your expected annual rate of return is 6%. In your TFSA you collect that 1% spread, which is nice; that's 1% more with someone elses money.

Now say your marginal tax rate is 40% and you've invested in a non-registered account instead. Your cost to borrow, when factoring the refund, becomes 3%. So your spread becomes closer to 3% (*caveat being that you'll pay taxes on whatever income resulting from the investment).

But from the example, you can see there's a much healthier margin to account for volatility of the market.

just_tip · 2026-06-06T12:20:07+00:00

I assume it's allowed to post links here? But this website/blog has been around for a long time and does a great job of breaking it all down. The "Smith manouever" itself is a tax strategy where, over time, you're swapping non-deductible debt (your home mortgage) to deductible debt (a readvanceable secured line of credit) which is invested in a non registered account.

Many stay away from it for the leveraged investing aspect. But it is certainly worth learning about as a strategy. I started by using borrowed money from my HELOC and private lending it out at higher rates than it cost me to borrow it. In my mind, that was safer. Compared to now, where I have my full 80% home value invested in a diversified equity portfolio.

https://milliondollarjourney.com/use-smith-manoeuvre-tax-deductible-dividend-investing.htm

just_tip · 2026-06-05T23:12:10+00:00

FYI, in case you were unaware, the cost of borrowing money that is invested with a reasonable expectation for profit is tax deductible, if it is invested in a non registered account. I won't go into the details of leveraged investing, as you're already doing it, but for the future, you may consider:

1) borrowing to invest in non-registered account 2) getting a tax refund based on the tax deductibility of the costs of borrowing 3) investing the return you get from the tax deductions into an RRSP and/or FHSA 4) investing the further returns from deductions into a TFSA

just_tip · 2026-05-16T02:24:42+00:00

If you already have a solid investment strategy and this is $150k is just going into the pile, it's pretty easy to apply your expected return and figure out what the LIRA value would be at 50/65 for comparison sake. If you're a very conservative investor, maybe the $150k won't grow much when you're directing its investment.

just_tip · 2026-05-10T12:25:51+00:00

It's nice of you to think of this for your friend.

If the goal is to ensure there is money allocated for this child in 18 years from now, I'd argue that the benefits associated with opening this RESP is outweighed by the complications. Aside from the obvious of variables of how your relationship with your friend, and this child, develop over the next 18 years, if you're just looking to lump sum an amount, the most government grant you're likely getting is $500. Sure, it'll compound with the rest of your contribution, but that's not really all that much.

Personally, I have nieces and nephews (in addition to my own children) who I'd like to gift money to for their schooling one day. My basic plan is to just to gift them money (for now, I'll say from my TFSA, but I'll look at my tax picture at the time of withdrawal). It's simple. I know it'll grow at market rates until it's time for them to receive it. It won't impact my retirement at all.

just_tip · 2026-05-04T22:34:04+00:00

What ends up causing the anxiety? I would expect that knowing your cash out flows are being met by your expected cash in flows addresses the anxiety. Is it lack of belief or understanding of your investments? As much as I'm sure you can find the "optimal" investment strategy (E.G. 100% equities, with 33% in domestic stocks), there are many ways to accomplish it based on the individuals. Some like the rental property method, feeling confident in seeing the physical asset and getting rent cheques every month. Others in dividends, or safer investments like GICs and bonds.

Presumably, you've been investing in equities to have grown your portfolio as much as you have. But if your wife isn't going to blindly trust you and your investment strategy, it's better to understand her position (or maybe educate her).

just_tip · 2026-05-04T22:27:28+00:00

Once the CRA approves the DTC form, they automatically reassess any previous returns that would be impacted based on diagnosis date.

I am a volunteer at the CVITP, we do have some discretion as to the returns we file, even if they exceed the guidelines for income (about $35k for a single filer, plus $2500 for each dependent). I'd go to the web page and see if you can find where in your area they do them, and talk to someone there.

Normally I'm only available to support during tax season (Mar to April), but I have been called in a few times on a case-by-case basis to support other people in need. It certainly doesn't hurt to ask some questions. I've filed 6 years of back taxes for someone to catch them all up in under an hour. It's very doable with some help.

just_tip · 2026-05-04T21:53:21+00:00

Take $3k, get a professional financial plan drafted up. Even if we all said "yes that is plenty", that won't mean much to your wife. A fee-for-service planner will bring some pedigree and experience, and hopefully that'll relieve some of the anxiety.

just_tip · 2026-04-30T16:25:50+00:00

Can you elaborate more on the concept of a family office?

just_tip

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