I believe I have seen a post on the Smith Maneouvre, but I was wondering if any of you Canadian bloggers could point me in the right direction (or send me a link to the post(s))? I would like to learn more.
Mr Wooly heard about this on the radio today and we have been talking about it ever since. From what I understand the basic principle is to pay less taxes and to put the money you save in taxes onto your mortgage. It seems like you reduce your taxes by investing in RRSPs, but the key is to use a home equity line of credit to borrow the money needed to max out your RRSP contribution. Then at tax time, you can write off your RRSP constributions, and take the money you save on taxes to pay down the principle on your mortgage.
I've requested the book from the library but it is pretty popular and I am 12 on the waiting list. Instead I have used my airmiles to get a Chapters (big Canadian bookstore chain) gift card and I may buy the book if it seems like a good idea. However, I wanted to find out more in the blogging world before making my purchase.
Thanks!!
www.milliondollarjourney.com
Specifically SM articles
http://www.milliondollarjourney.com/the-smith-manoeuvre-a-wealth-strategy-part-1.htm
http://www.milliondollarjourney.com/the-smith-manoeuvre-a-wealth-strategy-part-2.htm
http://www.milliondollarjourney.com/smith-manoeuvre-maneuver-mortgage-comparison.htm
http://www.redflagdeals.com/forums/showthread.php?t=150279
I've been following the thread, although I'm still a little fuzzy on exactly what happens.
1. I have a 15 year history of doing really solid investing on my own
2. I started my own business; this allows me to keep setting aside money for my retirement even as my own income is minimal in favour of building by business.
3. It just makes sense on some levels! - ie. putting your home equity 'to work' for you rather than simply walls around you. Having said that, I won't do it for long ... even I get the willies ...and want it all paid off eventually.
I'm not a big fan of it myself - I think it's more of a marketing plan for financial advisors however I do like leveraged investing which is essentially what it is.
Mike