# To do or Not to do...Part II



## zuma (Jul 18, 2020)

Well here I am at the beginning of 2023. I leveraged my house just before the pandemic and invested in Nasdaq as instructed by my "advisor" who makes commission from people who have no idea what they are doing in the market. 
So here I am about even overall since I started 3 years ago taking into account paying %.
I really don't know what to do. My gut says get out as I think the market will continue to fall into 2023 and then re-enter. 
I can handle paying the higher % for a couple years. There is also the possibility if I bail now I wont be able to leverage and have money to play with. Paying the extra 30k/year % and waiting until the market was where it was a year ago to make back the 350k my fund went down.....
But what do I know except that I won't be asking my "advisor" for any advice.


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## Freedom2022 (Oct 14, 2021)

zuma said:


> So here I am about even overall since I started 3 years ago taking into account paying %.
> I really don't know what to do.


I can't tell you what to do.
You have to decide for yourself. I just express IMHO:
1. If you are even and not losing any money, does it make sense to keep going with high risks? Interest rate will be high for a while. With high interest rate, you pay more and the market may go down.
2. If you bail out now, means your primary investment is in your house, assuming you have a lot of equity in it. Without owning growth stocks, you still do have investment.

I re-iterate, again, that I can't tell you what to do.


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## Thal81 (Sep 5, 2017)

zuma said:


> I leveraged my house just before the pandemic and invested in Nasdaq as instructed by my "advisor" who makes commission from people who have no idea what they are doing in the market.


Wait, you did what now? I think your advisor is a sleezy pile of dung.

Also I don't understand a good portion of your post. What do you mean by "paying %" , and "paying the extra 30k/year %" ? Do you use the percentage sign for the word "interest" here?


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## OptsyEagle (Nov 29, 2009)

It sounds to me that you are swinging wildly from a problem of too much greed creating too much fear. 

No one knows what the future holds precisely and we certainly don't know the timing of that future. Now we can blame a lot of these things on our advisors but two important points to consider before judgement is made is that first, they don't know the future any better then we do, although I agree, a few too many give off an aura that they do even if they don't actually come out and say it outright. 2ndly, and just as important, is that from my experience the ability to convince someone to borrow, in what appears to me to be in the 7 figure amounts, requires the markets to have done very well in the most recent past. In other words in March of 2020, where the markets were completely sucking, it is pretty near impossible to convince a client to borrow that kind of money to invest into that kind of market. As we know now, if you compare the two investment dates, the one you had, where you obviously were convinced to move forward with this plan, and March of 2020, the later investment date would have provided significantly superior results. Not sure if your advisor is to blame for this emotional conflict but usually how most deal with it is to pound the table on the fact that this is a long term investment and to not get too pre-occupied about short term, 2 or 3 year results.

Since I have found, that no one considers 2 or 3 years short term, and with leverage investments most clients watch it way too closely, the best advice I could give you is to not borrow to invest at all. Most investors are simply not cut out for it. It is not a fault of yours it is simply being human. So to answer your question, if you're investment is basically even now, I would cash out and end the agony right now. This is an opportunity that may not last. My secondary suggestion, if that one is not appealing, is to reduce your leverage to a level that you are comfortable with ignoring. That would be an amount that if you lost it all, you would be just fine. A funny story so to speak. Not knowing your situation, I cannot say how much that is but it sounds to me to be a number significantly lower then what you have currently borrowed right now. Good luck.


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## m3s (Apr 3, 2010)

If you aren't comfortable now and you have to ask

You should get out and thank your lucky stars you broke even. Chalk it up to a learning experience and don't blame anyone else if the market rebounds from here.

You have infinite information at your fingertips today. The lesson is to learn for yourself because ultimately you own the decision

People seem to always take credit for good financial decisions and blame someone else for the bad ones


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## zuma (Jul 18, 2020)

Thal81 said:


> Wait, you did what now? I think your advisor is a sleezy pile of dung.
> 
> Also I don't understand a good portion of your post. What do you mean by "paying %" , and "paying the extra 30k/year %" ? Do you use the percentage sign for the word "interest" here?


Sorry that part was muffled. I borrowed 600k against my house and now as a result of the increased borrowing rate I'm paying about 30k/annually to borrow the 600k.
Paying % = paying off the interest of the loan


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## Spudd (Oct 11, 2011)

30k a year is not pocket change. If it were me, I'd repay the loan and chalk it up to a learning experience. There's no knowing how the markets will go in 2023. But I am more conservative than many.


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## Tostig (Nov 18, 2020)

Eventhough I consider myself to be on the aggressive side of investing, I would never leverage my home to invest in the stock market or anything else. I read too many horror stories as I was growing up. I don't even borrow money to contribute to my RRSP. If I don't have that money, I don't have that money.

If you're suffering from FOMO, take stock of the extra money you do have (after six month's or a year of living expenses and RRSP are taken care of) and use that to invest. If things go sour, you're not going to lose your home.


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## AltaRed (Jun 8, 2009)

Spudd said:


> 30k a year is not pocket change. If it were me, I'd repay the loan and chalk it up to a learning experience. There's no knowing how the markets will go in 2023. But I am more conservative than many.


I agree because I don't believe in leverage in capital markets to start with. If the OP is about even, bail now and pay off the leverage while still in potentially positive territory. Consider this a 'zero cost' learning experience from a few perspectives: 1) fire your advisor and start thinking on your own, and 2) ask yourself why you continued to follow the market down in 2022 when it was clear central bankers were increasing interest rates and growth stocks suffer disproportionately in market declines.


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## james4beach (Nov 15, 2012)

zuma said:


> I leveraged my house just before the pandemic and invested in Nasdaq as instructed by my "advisor"


Leveraging is a very advanced strategy that has to be done extremely carefully. I've been investing for about 20 years and am not comfortable using leverage. I could see myself using it, but only with tremendous caution.

You should fire your advisor and then start educating yourself and/or see a better advisor.

That being said, it may be comforting for you to know that you are not alone. Many people have leveraged themselves (and their homes) aggressively over the years to invest in real estate and stocks. Sadly this has become somewhat normal. So you're not the only one.


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## Beaver101 (Nov 14, 2011)

I thought the OP parted with his advisor based on him/her coming here to this DIY forum. And his original "To Do or Not to Do" thread from about 3 years ago.

Anyhow, if the OP did retain his/her advisor since then, I'm curious if a "KYC=KnowYourClient" agreement was drafted or not? Or was his/her advisor a relative, friend or fly-by-nighter?


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## zuma (Jul 18, 2020)

Beaver101 said:


> I thought the OP parted with his advisor based on him/her coming here to this DIY forum. And his original "To Do or Not to Do" thread from about 3 years ago.
> 
> Anyhow, if the OP did retain his/her advisor since then, I'm curious if a "KYC=KnowYourClient" agreement was drafted or not? Or was his/her advisor a relative, friend or fly-by-nighter?


 There was a risk tolerance and investment questionnaire. Not a relative etc. Company based in surrey. Ill meet with them tomorrow where they will try to convince me to stay in the market


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## Ukrainiandude (Aug 25, 2020)

zuma said:


> I borrowed 600k against my house


Any particular reason for this? Just curious.
PS. I have a feeling Nasdaq my lose another 20-30% before it starts to recover. It might take years, similar to 2000s, to reach ATH


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## zuma (Jul 18, 2020)

Ukrainiandude said:


> Any particular reason for this? Just curious.
> PS. I have a feeling Nasdaq my lose another 20-30% before it starts to recover. It might take years, similar to 2000s, to reach ATH





Ukrainiandude said:


> Any particular reason for this? Just curious.
> PS. I have a feeling Nasdaq my lose another 20-30% before it starts to recover. It might take years, similar to 2000s, to reach ATH


Risk big, win big * said the dumbass


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## cliffsecord (Jan 10, 2020)

Holy moly!! $600k leverage? That's nuts! Are you really breaking even? As in, the value of your investments haven't changed but you are still paying $30k/year in interest? That means you are actually out 3x$30k=$90k?

I'd get out and use the $30k and just buy GICs if I were you. I'm not sure you understand the volatility of capital markets.

I've been thinking of leveraging for a while now, but I've always been chicken. I've lost enough money just going long.


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