With inflation running at between 2% and 3% your mortgage at 3.25% is almost free money. Invest your money wherever you are comfortable. You should be able to make a much better return than 3.25% in any number of real estate or mortgage or bond investments that feature relatively low risk. Do your due diligence fully and make a choice you can sleep comfortably with.
QUOTE (fxian @ Nov 28 2008, 12:05 PM) Pay it almost off (leave $1) and then refinacing out and invest the money somewhere you feel comfortable. Then the interest for the mortgage would be tax deductable. (ask your accountant if this is do-able)
I agree with this idea (also known as the Smith Manoeuvre). You effectively stop paying interest on your home out of your after-tax dollars (thus personal costs). The interest on the funds taken out for investment is now tax-deductable.
I agree with this idea (also known as the Smith Manoeuvre). You effectively stop paying interest on your home out of your after-tax dollars (thus personal costs). The interest on the funds taken out for investment is now tax-deductable.
QUOTE (martin123 @ Nov 27 2008, 01:00 PM) My mortgage is 142000, if i have the cash to pay, should I pay it off or in vest in GIC or the market. I have a variable morgage at 3.25% at this moment.
With a mortgage rate this low there is NO RUSH to pay it down .. in fact skip a payment if allowed .. unless you are very close to old age and wish to live off the passive income only ... use surplus cash to build a reserve, then to invest or buy more real estate .. with real inflation @ 6% anything below that is free money !
To build an asset base to retire off you must built UP the asset base, with OPM (other people`s money) i.e. investors or certainly low mortgages ! And this means investing in the right asset classes with cash + mortgage where the income off this asset class exceeds the mortgage !
With a mortgage rate this low there is NO RUSH to pay it down .. in fact skip a payment if allowed .. unless you are very close to old age and wish to live off the passive income only ... use surplus cash to build a reserve, then to invest or buy more real estate .. with real inflation @ 6% anything below that is free money !
To build an asset base to retire off you must built UP the asset base, with OPM (other people`s money) i.e. investors or certainly low mortgages ! And this means investing in the right asset classes with cash + mortgage where the income off this asset class exceeds the mortgage !
QUOTE (martin123 @ Nov 27 2008, 03:00 PM) My mortgage is 142000, if i have the cash to pay, should I pay it off or in vest in GIC or the market. I have a variable morgage at 3.25% at this moment.
Thanks
Martin
Martin, I would strongly suggest that you do not invest today in GIC`s or the market. You have 1 or 2 options if you wish to invest. You could fix your variable rate at 3.25% and take the $142,000.00 and invest it in multi-residential real estate in cities or areas that have 1% or lower vacancy rates. If you buy correctly, you should get a 12-15% return on that money. When the market goes back up (which it ultimately will in 2-3 years), the returns will be even higher. Be sure to incorporate a separate corporation for each rental building. Also, speak to your accountant to see what the tax implications will be.
Moishe Alexander
President, Canadian Funding Corporation
www.canadianfundingcorporation.com
Thanks
Martin
Martin, I would strongly suggest that you do not invest today in GIC`s or the market. You have 1 or 2 options if you wish to invest. You could fix your variable rate at 3.25% and take the $142,000.00 and invest it in multi-residential real estate in cities or areas that have 1% or lower vacancy rates. If you buy correctly, you should get a 12-15% return on that money. When the market goes back up (which it ultimately will in 2-3 years), the returns will be even higher. Be sure to incorporate a separate corporation for each rental building. Also, speak to your accountant to see what the tax implications will be.
Moishe Alexander
President, Canadian Funding Corporation
www.canadianfundingcorporation.com