How to Make Your Canadian Mortgage Tax Deductable

How to Make Your Canadian Mortgage Tax Deductable

Welcome to the Randy Selzer real estate podcast 
where we discuss important topics for buyers   sellers and investors in the Toronto area real 
estate market here's your host Randy Selzer Hello everybody it's Randy Selzer here welcome 
back to my YouTube channel or if you're listening   today on the podcast today we have a very 
special guest Robinson Smith is here and he is   an expert in mortgage matters and also in tax 
planning and he's got a family legacy happening   here he's also got a best-selling book today on 
Amazon I just found out that it's number one on   the best seller list so welcome Rob nice to have 
you on board today oh it's a pleasure thanks for   having me on Randy no problem so today we're going 
to talk we're going to delve kind of deeply into   stuff that a lot of people may not know about 
most people when they get a mortgage on their   house they don't give it much thought they talk 
to their bank or their lender or perhaps to a   mortgage broker and it's a loan on their house and 
they just pay it off it's there and it's one of   those things they have to renew the term every 
five years whatever and I think most Canadians   are aware that the interest on mortgages 
on your principal residence here in Canada   is not tax deductible in the United States 
it is I think a lot of people might know that   oh yeah in the United States they get to deduct 
their mortgage interest and whereas we do not   but your company starting with your 
dad and actually carrying on with you   have found a way in order a way that we can 
make that tax deductible and it's called the   Smith Manoeuver so I'm going to turn it over 
to you sir yeah well thanks Randy basically   my father Fraser Smith back in the mid 80s he 
became a financial planner and he was interested   in the fact that as you say the Americans could 
deduct a good portion of their mortgage interest   whereas we Canadians could not why does that not 
surprise me okay go ahead and you know Fraser   didn't think that was very fair at all so right he 
did what anyone would do which is read the tax act   right it's fantastic bedtime reading and so from 
all that from all that he came up with what he   subsequently called the Smith Manoeuver and it is 
as you say a way to convert your non-deductible   mortgage interest to tax deductible interest 
on a Canadian principal residence mortgage so   he he put his private clients into it 
for about 15 years before he retired   in 2000 and he came out with his book on 
the subject in 2002 so since the mid-80s   there are thousands and thousands of Canadians who 
have been implementing the smith maneuver right   and an increasing awareness now that that I've 
come out recently in 2019 into 2019 I published   my book Master Your Mortgage for Financial 
Freedom and as you just mentioned number   one today I'm glad to hear that I didn't check 
but it came out at number one in 22 categories   on Amazon on launch day not bad man not bad that 
might not be the only time you hear me brag Randy   but so sales are still going very strong 
and you know my dad passed away in 2011.   he came back into advising you know he came 
back into advising 2005 and I joined him in   06.

He passed away in 2011 and I kept on going 
as an advisor until the middle of 2018 and I   sold my advisory at that point because I wanted 
to sort of continue my father's mission which   was to make sure every Canadian homeowner 
coast to coast was aware of this strategy   and since he came back into advising in 2005 
you know he didn't really do any promotion   of the strategy he was busy with his own client 
base and as was I when I joined him in 06 and so   getting back out there to the Canadian homeowners 
is is really my primary mission right now with the   release of my book I'm doing a lot of speaking 
engagements people such as yourself personal   finance groups real estate investment groups et 
cetera so word's getting out and Canadians are   becoming aware of this which is fantastic because 
it's not easy out there as usual one thing I can   tell you I know from my experiences as a born and 
raised Canadian we pay too much tax on everything   man I don't know it's everything and it's a lot of 
hidden tax that you don't even realize that you're   paying but every time you fill up your car with 
gas every time you pay your insurance all that   stuff there's hidden taxes in that and of course 
when we're talking about real estate we're talking   about large numbers large payments so tell me more 
it sounds good yeah that's absolutely right you   know we Canadians pay more in tax than we do on 
food clothing and shelter combined and if you know   Maslow's hierarchy of needs the basic simple 
requirements for existence right we pay more in   taxes than we do in all those combined so yes you 
know we're consistently within or close to the top   five highest tax paying citizenry on the planet I 
believe it now you know I strongly feel that that   we shouldn't mind paying taxes they pay for 
hospitals roads bridges oh yeah right yeah   we we're all good citizens we're all good 
citizens but then Randy we hear you know we   all hear these stories of what the government is 
doing the various governments you know municipal   provincial federal and they're frittering away at 
these dollars that we have earned and sent to the   government and so it's no wonder we get upset 
when we talk about taxation.

Don't even get me   started because you're absolutely right it's 
brutal actually in a way anyways so I'm very   fascinated I want to learn about this and I know 
sort of that the the centre point of this or what   makes this possible is a special type of mortgage 
there is a special type of mortgage to make sure   I'm saying it right it's a re-advanceable mortgage 
which does exist and I'm going to let you explain   it one question do these mortgages exist at the at 
the main five Canadian banks like TD, BMO, Royal   Bank can you get a re-advanceable mortgage from 
them yeah there's re-advanceable mortgages are   offered by a wide variety of mortgage lenders and 
and I'll explain what a re-advanceable mortgage   is in just a moment but I'd first like to preface 
this that anybody considering the Smith Manoeuver   really needs to look into the appropriate 
financing with the help of a professional because   while there are a lot of different re-advanceable 
mortgages out there they are not equal and just   going to your bank that you've been dealing 
with for 20 years and saying I want to do the   Smith Manoeuver I need a re-advanceable mortgage 
the mortgage specialist is going to go what's a   Smith I don't know what that is but we do have a 
re-advanceable mortgage and it's most likely not   going to be ideal for your personal situation so 
okay in any event whatever advanceable mortgage is   we know that in Canada we get a down payment 
together we scrape that together we go to the bank   and we get a mortgage from the mortgage lender 
or whoever it is right and it's typically one big   large amount $300K $600K a million dollars 
yeah and growing yeah and all of that debt we   promise the banker our spouse and God that we're 
going to pay this off over 25 years or so and   all of the interest on that is non-deductible and 
that's what makes it so expensive even at today's   low rates takes a big chunk your paycheck yep 
but what a re-advanceable mortgage is and again   they're not all identical but essentially they 
have a line of credit which is attached to that   traditional amortizing mortgage loan okay plus one 
or more lines of credit depending on the lender   and both sides of this mortgage talk to each other 
so when you make any sort of payment against that   traditional mortgage component that let's say six 
hundred thousand dollar mortgage balance you make   your first payment is a thousand well a lot of 
that goes to interest non-deductible interest it's   gone the price might pay for borrowing the money 
but right let's say two thousand dollars reduces   the principal balance on that loan but the line 
of credit sees that and the limit automatically   increases by two thousand dollars so you can 
start with a zero line of zero limit on that   line of credit but as soon as you pay down that 
mortgage balance by two thousand you can get back   at that two thousand now the issue is that a lot 
of Canadians have this type of mortgage already   they don't necessarily know why their mortgage 
specialist or mortgage broker put them into this   they don't fully understand it they don't know how 
to use a lot utilize it to their maximum advantage   and so what they do after they see that first 
mortgage payment reduce that balance by $2000   the line of credit limit increased by $2000 right 
fantastic that's more than a BMW payment right   I can also go out for dinners I can get a car 
motorcycle travel all this sort of stuff and so   what they're doing here with this type of mortgage 
is quite possibly unwittingly they're paying down   non-deductible debt on one side which is expensive 
and they're replacing it with non-deductible debt   on the other side which is also expensive correct 
and that's not the worst of it in order what   they've done is while they're increasing that 
line of credit balance with non-deductible debt   what have they bought with that money they bought 
cars as I said motorcycles vacations all these   yeah all these quote-unquote assets 
which decline or depreciate in value   right so we call this wealth destruction 
the Smith Manoeuver relies on the principle   that the CRA says if we borrow to invest with 
the reasonable expectation of generating income   we can deduct the interest on that that's right 
so all we're doing when we implement the strategy   is we're putting this available credit to work 
for us not against us we're gonna buy investment   assets which are gonna grow in value over time 
and in doing so we create these tax deductions   okay so let me let me make sure I've got this 
straight so many people have a mortgages, many   people have a line of credit or we call it a HELOC 
I guess that's the same thing where you get a home   equity line of credit but those are typically 
separate from each other and what we're talking   about here with this re advanceable re-advanceable 
mortgage is the two things are joined together   both the typical mortgage loan plus the line of 
credit are connected that's right and that's sort   of right I was just going to say and when you make 
a mortgage payment that increases your available   credit on the line of credit simultaneously so 
they're joined that way that's a very that's a   very large misconception here okay there are lots 
of internet forums discussions etc.

On the Smith   Manoeuver on the internet but it's a rat's nest 
out there there's tons of misinformation strangers   helping strangers who aren't professionals right 
and one of the biggest misconceptions is well   let's say I've got a traditional mortgage from 
RBC right but I've got some equity in my house   I can access so I'm going to go to CIBC and get 
a HELOC in second position or maybe I also get   it from the Royal Bank whatever the case may be 
right and I can pull that out and I can invest yes   you're getting invested for your future yes 
you're generating tax deductions because you   borrow to invest but no you're not converting 
your mortgage because the line of credit limit   does not speak to the amortizing loan side so you 
pull out that full new fifty thousand dollars to   invest for example and then the next month you 
make another mortgage payment it goes down by two   thousand you can't get back at that two thousand 
I got so it's a very specific it's not just   slapping a HELOC against your mortgage in second 
position it's a very specific type of mortgage   okay interesting okay so that is you know step one 
in the Smith Manoeuver getting the right type of   mortgage so you can actually begin converting your 
non-deductible mortgage debt to tax deductions   so whenever I pay down that one side I borrow it 
back to invest stocks bonds mutual funds mix REITs   private lending investment real all these 
sorts of things qualify for deductible interest   okay so I pick what is best for me I consult with 
my financial advisor whatever the case may be   so now I'm getting invested on a monthly basis 
I'm generating these tax deductions as well at   the end of the year when I send my tax return 
in the CRA says well we came in every two weeks   and took tax off your paycheck but we didn't 
know you were going to generate all these tax   deductions we took too much we owe you money back 
right so when I get this tax refund I apply it as   a prepayment against my mortgage and then that 
line of credit limit opens up again dollar for   dollar no matter how much that was and I can pull 
that out to invest as well smart move I make yeah   by making this annual prepayment I'm getting rid 
of that non-deductible debt faster and faster is   better when we're talking about non-deductible 
debt and this is money that otherwise wouldn't   exist if I weren't implementing Smith Manoeuver 
I get it I understand what you're saying which is   remarkable for me so okay and I would guess oh so 
that's one year and then over time you're going to   sort of transfer the type of loan that you have 
from a mortgage more to a line of credit each   year that goes by it's going to be more and more 
the line of credit and less and less the mortgage   exactly way of transferring it I get it yeah so 
each year you continue this process each year you   receive the refund and the refunds get larger and 
larger each subsequent year and your investment   portfolio is is growing you know compound 
growth taking advantage of compound growth   the the main issue that a lot of people face with 
this is they've they've grown up being told by   people quote unquote wiser than them and older 
than them that they need to be clear title on   their house on their they need to they need to pay 
out that mortgage I was just thinking right okay   and so what happens is you know and typically 
we have this your total debt is not going to go   down it's going to stay the same that's right and 
so this is where we face a challenge with some of   these Canadians because it's been ingrained in 
them to be clear title but what they're doing   is each month when they make those mortgage 
payments they pay down that debt they're   increasing their equity but what are they doing 
with that equity absolutely nothing most of them   most of the time nothing you're right and not 
only is it earning zero percent it's negative   return because of inflation and that's much 
better than actually re-borrowing it to buy   consumer items that depreciate in value right but 
if I'm concentrating you know we Canadians take   this sequential approach to our financial affairs 
we got two goals one get rid of that mortgage two   start saving for our retirement that's right 
but the decision on which of these goals   to attack first is made for us not by us because 
if I don't take my after tax dollars and put it   away in an investment portfolio for my future 
nobody cares nobody's going to come knocking on   my door no one's going to go tsk tsk that's right 
I'm the only one who's got my back but if we don't   make a mortgage payment someone is going to come 
knocking on oh yeah and they have no sense of   humor absolutely no sense of humor so that's what 
happens we realize that we've got limited dollars   and so we apply that money to making our mortgage 
payments and by the time we hit retirement we're   now in a one million dollar home right which is 
clear title right and I'm living off of fixed   income because I haven't been investing for the 
past 25-30 years I've been paying out my mortgage   so now I've set myself up for being 
financially reliant on my children living in their basement suite, a reverse mortgage, 
working during retirement, because I haven't   been able to take advantage of compound growth 
and what the Smith Manoeuver does is it eliminates   that non-deductible debt faster than if you're 
paying off the mortgage traditionally plus it   generates this investment portfolio which can be 
worth hundreds of thousands so now you've got an   investment portfolio you can draw income from 
it and you're not you don't have these limited   options you can go golfing and you can go tend 
to your garden instead of nothing not a bad idea   right oh yeah exactly okay number one question 
CRA know about this and they're okay with it? It's   been around for years I know so they're you're 
all right yeah it's been around since the mid 80's   back in I'm not sure exactly when it was but back 
in about the mid 90's I think towards the late 90s   my my dad at his office got a surprise visit by 
two gentlemen in suits and they walked in and   they said to his receptionist that we'd like to 
speak to Mr.

banking

Smith about this so oh boy okay so   she ushered them in and they sat down at his desk 
and they explained we're from the CRA we want to   hear what this is all about right and dad being 
dad he probably lit up and he got his pad of paper of our best financial circumstances 
which we are legally entitled to   entitled to do so he explained what it 
was and and halfway through one of the   guys leaned forward and said is this going to 
work on a $70,000 mortgage? are you serious There are I know for a fact there are 
people who are employed by the CRA who are   implementing strategy you know I've had lawyers 
accountants as clients you name it, cops, so   interesting very interesting it's kind of it's 
kind of intricate but it's also kind of simple   in a way basically you are just you're just tying 
those two different things together and you are   automatically generating a line of credit but 
you have to pick the right investments okay so   I'm gonna play devil's advocate a little bit here 
I mean when you are using borrowed money which   is basically what it is to make an investment 
it's like buying stocks on margin which there   are some risks involved with that I would think 
and I'm just kind of shooting this out there that   this is going to work for a certain type of person 
who is perhaps hands-on who is on top of things   but I don't know the average Canadian who you 
know makes a contribution to their RSP once a year   and then forgets about it for the next 12 months 
until they get their final you know the year-end   statement they don't even look at it would it 
not make it might make better sense for someone   who's a little more hands-on because you got to 
make sure that those investments are going to go   up in value not down because that's borrowed 
money that you're using to buy with yeah the   Smith Manoeuver is not for everybody right firstly 
there's a you've got to have to have at least 20%   equity okay it's a little off topic here no no 
that makes sure to get the right type of mortgage   right but secondly the people who are going to shy 
away from this are those who who can't wrap their   head around the fact that the Smith Manoeuver says 
you're going to want to maintain your total debt   you're going to convert it from bad to good 
debt and get invested but you're going to   want to number one number one objection yeah and 
a lot of people are going to say I can't wrap my   head around that I my wife my husband if I try 
to persuade them they they'd kill me whatever   the case and so that's that's fine you don't want 
to do anything you're not comfortable with right   but if you do implement the Smith Manoeuver you 
do you are required to invest now we need to be   very careful on what we invest in and I tell 
everybody I don't advise on what to invest in   it's up to you know what are they comfortable 
with what do they have an understanding of   right but I advise them don't take this money like 
if it's freeing up $1100 bucks that you can invest   don't take that to to Vegas quote-unquote 
right gamble on your customers bitcoin there's a lot of stuff out there that have 
generated consistent returns for years and   years and years they may be boring right they 
may not be exciting but this is boring you know   this is this is a long-term strategy so the 
fact that it's a very very long-term strategy   really flattens the market risk curve on this 
you do have to get it right and there are a lot   of people out there who've got their their 
quest trade account or their their Robo or   whatever and they're doing their own investing 
that's going to be fine for some a lot of people   they're full-time school teachers or policemen 
or no they're not they're not money managers and   so it's time to enlist someone who can help 
guide you on this who you trust absolutely   help guide you and there are people out there 
who who've got a lot of letters behind their   names they do this for a living yeah and you 
know I'm sure we need to be cognizant of fees   but you know we're talking about your family's 
financial security your long-term security   and we shouldn't unless we're professional money 
managers ourselves we shouldn't try to attempt   to do this we shouldn't try to do our our own 
taxes, our own investing, we shouldn't try to   pick our own mortgage enlist the professionals I 
totally agree totally well okay very interesting   what happens okay so you get it you got 
it set up you're doing the Smith Manoeuver   everything's working great you have to sell the 
house you're being transferred you're moving   to Montreal you got to sell your house and move 
to Montreal how does that work in terms of your   investments? or do you take that can you transfer 
it or is it portable can you move that with you   or how does that work? yeah people move all the 
time yeah and there is there is a way if you're   implementing the Smith Manoeuver what you're 
concerned about is the deductible debt that you've   generated to date right the investments themselves 
are free and clear they don't care where you live   because I took from that that line of credit to 
buy investments the lender the re-advanceable   mortgage holder doesn't care what I do with that 
money they don't care if I borrow from that line   of credit to buy a car to invest to go on vacation 
they should they should well you know so but they   also don't care if I take that money out turn it 
into cash and throw it in the fireplace and burn   it because they've got the house as security 
that's what security for the union right   credit also the investments are free and clear 
they're not encumbered by any debt I got you   so when the house is sold when the house is 
sold the existing mortgage is paid off likewise   the line of credit is paid off so everything's 
cool the way that we want to engineer this and   it's done all the time but you need to have 
someone on your side who understands this so   like maybe we'll talk about the Smith Manoeuver 
Certified Professional accreditation program in   a second but oh boy okay there are these there 
are these people out there mortgage brokers   notaries etc.

Real estate lawyers who understand 
how to structure the sale of your current home   and the purchase of your new home so that the 
deductible debt that you generated to date   can be ported over to the new house rather than 
paid out and eliminated and having to start again   on the new house good okay good so it can it can 
be done okay I mean moving house is a frequent   occurrence and it is under clients that have 
moved house yep my favorite clients when they   move at least every five to six years I think the 
Canadian average is seven but yeah we like people   to move it's always a good thing yeah it keeps the 
economy going that's right very interesting okay   what about demographics again I'm a little bit 
older some people would say I'm a lot older but   with this I would think this is appealing 
more to people in a younger demographic if   they've got in their like late 30's or 40's 
where they've got 20 years to look forward to   building assets whereas somebody who might 
be 58 years old maybe that's not the right   thing for them I'm not sure well you know there 
are Canadians in their 60's and above who have   begun the process of oh okay the the thing to 
remember here is firstly we're living longer   so if I'm 60 years old it's not old these days 
it's not old these days and if I've got debt I   really need to have a serious discussion about 
whether I can convert that into an investment   portfolio if I'm 60 am I going to live to 85 I've 
got some time maybe yeah maybe 85 or older so it's   it's about it's about figuring out you know what 
are the numbers say and what are the timelines and   does that work for my personal situation so yes 
there are people on the more mature end of the   spectrum who are implementing the strategy and 
there's a lot of interest in the strategy for   people in their mid 30's, 40's who are looking at 
their first home granted the number of those aged   people are dwindling considering expenses the cost 
of buying a house these days but they have a lot   of time to watch their investment portfolio grow 
they've got a lot of earning power in the future   the 45's to 55, 50 year olds really are the 
ones who are really embracing this thing I   still got lots of time so thank you who got lots 
of debt that's your ideal demographic right there   yeah they're going to likely have owned their home 
for a period of time where whereby they've got the   available equity that they can get the right 
type of mortgage if I've only got five percent   down when I buy my first house I can't implement 
it because a mortgage lender for advancement will   only extend up to eighty percent of the value. 
Someone somebody who's 45 maybe they've owned   their home for a while the equity's built up 
and they can get the right type of mortgage   and the older one is you know we can talk 
about accelerators but the older one is,   if they refinance out of a mortgage that doesn't 
work for the Smith Manoeuver into one that does   they may have immediately available 
credit based on the value of the house   of 25 grand $50,000 $100,000 these days $200,000 
easy $400,000 right now when we talk about   pulling that equity out to invest it's one of 
the accelerators it's called prime the pump   we're talking about accruing new debt if I've got 
a $500,000 mortgage on my existing house and the   mortgage doesn't work and I need to refi into a 
mortgage that does work I still owe $500,000 my   debt hasn't changed now I have the opportunity 
to convert that mortgage debt into an investment   portfolio right but because the value of my house 
has gone up over time I also have a couple hundred   thousand that the lender is saying hey not 
only do you owe us that $500,000 non-deductible   mortgage debt like you did with the old mortgage 
lender but we're also going to give you a line   of credit with an immediately available limit 
of $200 grand do with that what you want right   and that is additional borrowing that's additional 
leverage and this is where you really need to have   that conversation with a professional is it 
suitable for me to pull that out and invest?   what's my age? what's the you know my capacity 
to carry this additional borrowing? what are   my goals, my timeline? all that sort of thing I 
understand so there's a lot to consider and you   mentioned earlier it's simple and complex at the 
same time and it is because I can describe the   Smith Manoeuver as pay your mortgage down borrow 
it back to invest take the tax refund prepay   pull that out to invest as well yeah and you're 
on your way yeah but the actual you know the we're   dealing with mortgage financing we're dealing with 
investment math and we're dealing most importantly   with the CRA so there are nuances in here where 
you need these professionals to help you implement   it correctly right okay devil's advocate I like 
this very interesting the one thing that I think   would screw it all up is there's an assumption 
built in that house prices will continue to rise   and we've been in a really good time the last 20 
years man I'm sure out in Victoria and B.C.

I know   for a fact even more so than here in Ontario 
prices have been on a tear and but there's an   assumption built in that prices will continue 
to rise and I hope they will but you never   know anything's possible in the world right? what 
would happen if prices started to soften is there   a danger if you're keeping that debt level high 
like that is there a danger that eventually you   could end up under water or is that if interest 
rates start to go up and we might see a dip in   prices I don't think we will but we might you 
never know is there a risk there? yeah so there's   two things there there's a softening of prices 
and interest rates which you mentioned okay yeah   rates are going up by the way you heard it 
here first I'm pretty sure they're not going   any down anytime exactly where can they go 
yep so you know talk about the softening of   real estate prices first my father developed this 
back in the mid 80's okay and their housing prices   have gone up and they have gone down they've 
gone up they've gone down 1989 a bad year   yeah so when we're implementing the strategy 
we're implementing it on a principal residence   the day I get my financing for this I'm up 
and running I can get to this now firstly   it's not like the stock market if prices stop 
start going down I can sell first of all I don't   want to sell this is the house in which I live 
right and I've got a five-year term on this and   regardless of what housing prices are doing the 
mortgage lender is going to say hey renew for   another five year sign here it's a different 
story if I buy my house with five percent down   then I'm really looking at this going what's 
going on with housing prices I'm a little   concerned here whatever but in order to do the 
Smith Manoeuver you need to re-advanceable and   you can't get a re-advanceable without 20% percent equity 
right so there's a big buffer there when you talk   about interest rates again I'll mention the fact 
that my dad developed this back in the mid 80's   and you might remember what rates were doing 
then back home craziness yes so if my father   developed this strategy back in the mid 80's when 
rates were double digits if it didn't work then we   wouldn't be talking today and we have to look at 
the fact that the Smith Manoeuver is very robust   because and I've heard people on internet blogs or 
whatever it is say hey the Smith Manoeuver is not   going to be it's not going to work when rates are 
high I've also seen Smith Maneuver is not going   to work when rates are low well here's the thing I 
get all my news from Facebook! I don't know about   you man that's right here's the thing with rates 
is when interest rates are low as they are now   right just because of how the math works I have 
let's say $1100 bucks to invest on a monthly basis   okay now interest rates are low I'm investing 
a relatively large amount on a monthly basis   which is fantastic however my tax refund isn't 
as large correct? correct so yes I'm getting   invested a bunch right now on a monthly basis 
but my tax refund my tax deductions aren't as   powerful well when rates go up I have less maybe 
I don't have $1100 to invest each month maybe I've   got $900 to invest each month so I can't invest 
as much but my tax refunds are higher or bigger   because rates are higher so there's this 
there's this balancing component to it very interesting I keep trying to trip you up and 
nothing's working nothing's working and what I can   see everything makes sense here it makes perfect 
sense everybody should be doing this you know   just in case you don't ask I mean I'm sure your 
viewers or listeners are going to be wondering   what are the risks you know we talked about 
a couple of them there's interest rate risk   yeah there's you know interest rate risk if I've 
got a mortgage I've taken on interest rate risk   to begin with whether or not I'm doing 
the Smith Manoeuver if I'm doing the   Smith Manoeuver I've also got that line 
of credit component which has its own rate   quite likely right and so I'm also opening 
myself up to additional interest rate risk   but again the long-term nature of this smooths 
out that rate risk on the interest side and   as I mentioned my dad developed this back in 
the mid-80's when rates were double digits so   there is risk on that side but it's you 
know it was as long as things keep on going   relatively normal and we don't see rates in the 
30's and 40's and stuff like that I hope not it's   proven manageable yeah market risk again you're 
exposing yourself to you're getting invested with   money that otherwise you weren't going to invest 
because otherwise without doing the strategy the   money's not available to you so now you're getting 
invested there's market risk there you could you   could have a GIC and the rates are going to go 
up on your investment so you again if rates go up   you may get a higher rate of return on something 
simple like a GIC which I wouldn't recommend but   yeah we always want to look at you know when I'm 
borrowing to invest I'm paying for that borrowing   that's right it's got to be does it make 
it worthwhile GIC's a bad example anyways but you know we also have to remember that if 
I'm borrowing you know we're borrowing at 2.95%   these days but even if I'm borrowing 
at six percent if I'm at the 50%   marginal tax rate right it only 
cost me three percent money   right that's right you're going to get half 
back exactly so interest rate risk, market risk,   regulatory risk the government's CRA they 
can make any change they want at any time   we've you know when I was an advisor we saw quite 
a few moves which okay how do we deal with this   okay well it's just the effectiveness of the 
strategy over here but it's okay over here   balances that sort of thing okay there's 
there are all sorts of risks that one faces   when they are implementing a financial strategy 
regardless of what that financial strategy is   right life is a series of risks sometimes 
it's a big risk sometimes it's a small risk   still a risk but you know oftentimes if you go 
with a small risk you're going to be okay people   take a risk every day when they get in the car 
and make that drive to work better believe it very   interesting let's say someone listening to this 
today or someone watching us today is interested   they're in Canada they've got you know they've 
got at least 20% equity in their house and they're   interested maybe in taking a look at the Smith 
Manoeuver what should they do next? smithman.net s-m-i-t-h-m-a-n-net it's shortened from smithmanoeuver.net because 
no one can spell manoeuver correctly including   I can't I had to look it up anyways I'm going to 
put your contact info underneath on the YouTube   and also on the podcast as well so people will 
be able to great so yeah smithman.net I've got   my book there you know for those listening on the 
podcast you can't see this but it goes on YouTube   there it is Master Your Mortgage for Financial 
Freedom awesome so there's the book the Smithman   Calculator which we've developed which is very 
powerful within just a few minutes you can see   the projected net benefit for your own personal 
situation I've also got a homeowners course   but the most important thing here is you go 
to the website there's more information there   you can get the book if you want but just 
get the book go to the library and check it   out for free if you don't want to pony up the 
$24.95 right learn about it get to know it and   you know do the initial research and 
figure out if it is worth it for you or not   and then going forward if you decide to proceed 
then we've got as I alluded to earlier we've got a   network of Smith Manoeuver Certified Professionals 
coast to coast okay good so mortgage brokers,   realtors, investment advisors, accountants etc 
so all these professionals you can surround   yourselves with who know each other okay and 
you're you have reps in Ontario as well oh yes   yeah so there's a link that they can get 
connected to Smith Manoeuver certified   professionals will connect them in their area 
but that's the most important thing is just   learning more about it educating 
yourself getting comfortable with   maintaining your total debt you know understanding 
why that's the big that's the big one I know with   my clients that's going to be the number one 
question wait a minute you're saying that we   owe $600,000 on the house and you're saying that 
we should keep it at six hundred thousand over the   next fifteen years it'll still be six hundred 
thousand it will and the answer to that is yes   yeah and when you look at well what am I getting 
with that six hundred thousand dollars of debt   that I'm maintaining well depending on your 
numbers you could be upwards of $2.5 million   dollars with an investment portfolio 2.5 
minus 600 grand oh would you do the math   Randy but I'd rather have that I'll get on my 
calculator than a zero investment portfolio   and a whole bunch of equity which has 
been doing absolutely nothing for me for   all these years you tell a wealthy person that 
you live in a clear title home they're going to   look at you like you got three eyes it makes them 
sick they they want to run away you know they know   the power of debt but they know the power of good 
debt not bad they know the evils of bad debt I am   beginning to was not beginning to believe I fully 
believe that we need to model what people think oh   this is only for billionaires or you know really 
rich people or celebrities or something we need   to start modeling some of the stuff that they're 
doing because if it works for them it can work for   an average and ordinary Canadian as well and I 
think it's great that's exactly it you know my   dad as I mentioned the mid 80's he didn't develop 
the strategy for the millionaires and billionaires   they already have their fancy tax accountants and 
tax lawyers and advisers telling them how to not   have any non-deductible debt how to maximize their 
tax deductible debt they've already got the means   to do that he developed this for your typical 
Canadian $80 grand a year $150 grand a year   big stinking mortgage which is taking a big cut of 
their paycheck each month they can't get ahead I   don't know how many families have said I make 
$130 grand a year and I can't pay for my kids   braces that's right you know this is for them this 
is so the typical Canadian can emulate the wealthy   I like it I'm going to promote this this is 
good and so I'm out of questions I mean you've   answered them all and again it's kind of a very 
elegant kind of at the same time simple concept   and I'm surprised that not too many people 
are doing it although obviously more and   more all the time but I think a lot of people 
are going to get value out of this I really do   think it's a great idea and you just got to learn 
about it educate decide if it's for you it's not   going to be for everyone no I agree if there's a 
you know yeah and if it's not for you don't do it   if we don't educate ourselves we don't know what 
options are out there we don't give ourselves the   chance to say yes or to say no right that's right 
okay and I will or I know you said don't bother to   buy the book get it at the library but I'm going 
to say to people buy the book if you don't want   to buy the hard copy get the kindle version and 
so you've got it at home means you can read it   on your phone you can read it on your desktop 
whatever I would I would urge people to do that   I'd love it if they bought the book I love it 
they just, come on Rob, come on all right buy   the book you're a businessman come on! anyways 
this was a great talk I really enjoyed this today   and let's keep in touch and like I say I'm going 
to put all your contact info there so hopefully   we can drum up some business for you for anyone 
still on the call anyone watching or listening   if you have questions please put them down there 
please put your questions and we'll try to answer   them in a timely manner and if again if you're 
on the YouTube channel don't forget to subscribe   if you like what you're seeing give us a thumbs 
up likewise on the podcast and the podcast by   the way is on Podbean but it's syndicated 
everywhere it's out on Apple iTunes and   Spotify and Stitcher and a whole bunch of other 
ones so we'll be all over the place very shortly   so Rob thank you again sir for being here 
today it's been a pleasure Randy it was   a pleasure talking to you okay hopefully 
we'll see each other again soon you got it

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