Loading ...some food for thought
https://milliondollarjourney.com/use-smith-manoeuvre-tax-deductible-dividend-investing.htm
I found this interesting article. Long, some good information and one can get lost here.
IMHO and I am not an accountant, so please do your own macro study, I am going long debt, short fiat. I’d love to pay my present debt with future fiat that I feel will be much less valuable.
I have several operating businesses, and intend not to draw a salary at near 50% income tax, but tap into an LOC weather HELOC or other available at or around bank prime. Saving in tax, servicing cheap debt and settling in the future with cheap fiat. This has worked wonders for my parents in communist east Europe and for folks who believe that we debased fiat by printing it and not earning it, makes sense.
As we do not have sound money, but toilet paper, I am very happy trading it for real assets. So far so good.
This is not news to most who frequent this blog. Leverage in good well positioned real estate and equites pays off.
I can confirm that this technique works. When I purchased my last home for cash, I asked and was given a HELOC for 80% of the appraised value. This was 11 years ago.
It worked well when the rates were higher. More interest expense. Bought Canadian Dividend payers, banks and utilities. Over the years I added the Precious Metal dividend players. Low dividends but greater capital return. It provided a higher income from capital gains in a much larger portfolio. Have to be prepared to weather the ups and downs. A multi year hold. Stats show that equities increase 70% of the time. Odds are in your favour generally and dividend payers are usually more stable. I was very happy if my HELOC derived portfolio returned 10% over expenses on average. Slow and steady does work if one starts early.
If you keep it going long enough before you pay it down, indeed you would end up playing the currency devaluation game. Easier to pay down.
Now, the risk is higher with nose bleed valuations…..except the commodity based stocks. There are no guarantees in life.
i just buy highest and best use real estate ( commercial). Total roi pushes 30% with free $ from the institutions. Just did a deal with 75% leverage and 2.8% 5 yr fixed mortgage 25 yr amortization, national tenants and corporate guarantees on paper. And yes, there is no guarantee in life. Life is a risky activity, might as well get on with it,