# General strategy / Heloc for investing?



## SMM (Jul 10, 2011)

Long story short when I wasn't sure what I wanted to study post-secondary I became involved in an industry that allowed me to work from home and make an extremely good income. However recently it has come to a screeching halt and I feel it is time to move on to something I actually would like to be doing now.

I purchased my home at 20. Making so much in such a short period of time, being young and not knowing anything about investing I just figured most people spend a life time trying to pay off a mortgage so why not just dump it all into a house. 

Now being 23, I am either looking to go study something I find interesting to me and would enjoy doing for the rest of my life. Or follow my dream and spend some time travelling around the world first. 

I have a house worth ~300k with a 50k mortgage. A car worth ~5k (paid), 6k savings/emerg funds. The only real investment related decision I made was purchasing a house with a 2bdrm basement apartment with the intention to possibly rent it out in the future.

I have no debt other then the mortgage. 

I am looking for some advice on what to look into as far as the best decision to make the money I already have work for me. Especially in the case I decide to travel (in which case I will sell the car before going). I'm stuck into a 5yr term @ 5.5% on the mortgage so refinancing isn't really an option until then because of the differential interest fee charged for early renewal.

So lets just say I decide to travel for a couple years. I have my mortgage setup in a way that if I rented both units out the rental income would cover the mortage/property tax/misc fees for repair + taxes on the income (have a handyman on call)

Given that I can exchange my services for room + board when I am travelling, do the odd bartending jobs for pocket change, etc. What would be the best way to go about using a HELOC to invest to my advantage. What can be written off as tax deductions?

Given the good prime right now, lets assume even if I dumped 150k heloc into a stock like CIBC the dividends earned alone outperform the amount of interest needed to be paid on the credit line. Although I would be weary of doing this now, but if the market starts to go south like back in 2009 I could see making a move like that being extremely profittable over the next couple years.

Lets assume the absolute worst case scenerio and that I will be travelling next year. So my only income in from the rental income and whatever I can make from investments while abroad. (and wont be using that income while abroad since I will be trading my services from room+board+food)


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## Jungle (Feb 17, 2010)

Your story is..amazing. You were young and making money, didn't know what to do, so you dumped it all into your house. You have a 300K house with a 50K mortgage which is incredible. 

You have the right ideas and seem to be a pretty smart guy with money. In regards to your questions, the money you can write off from a leveraged loan is your marginal tax rate. So if your tax rate is 40%, you can deduct 40% off your interest costs. 

As for putting all your money in CIBC, you have the right idea but do not put all your eggs in one basket. Best to choose a small basket of stocks, or even ETFs. 

I do the same thing with about 8 stocks and one etf. However, beating the benchmarks with stocks for me year after year seems pretty hard, so I just add to an ETF now.


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## Eclectic12 (Oct 20, 2010)

SMM said:


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## SMM (Jul 10, 2011)

Eclectic12 said:


> SMM said:
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