tag:blogger.com,1999:blog-5465015914589377788.post840523849275186521..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Time for the Smith Manoeuvre?Michael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5465015914589377788.post-80604280456370248322008-11-11T12:21:00.000-05:002008-11-11T12:21:00.000-05:00I'm not a big fan of leverage too. However, I thin...I'm not a big fan of leverage too. However, I think most of us would have to admit that we are leveraged in the stock market, if you, like me, both own stocks through your RRSP and also have a mortgage.<BR/><BR/>I am a big fan of not making any bold moves. So if you think stock are cheap and you want to take advantage of that, maybe make some small moves. For example, if you subscribe to an asset allocation formula between stocks and bonds, maybe now is as good a time as any to rebalance by selling some bonds and buying some stocks.<BR/><BR/>If you have an all-stock portfolio and a mortgage, maybe now is a good time to maximize that RRSP contribution to buy stocks, versus making a lump-sum payment to your mortgage.<BR/><BR/>You could also look at lowering your mortgage payments, if possible, so you could direct more cash to the market through registered or non-registered accounts.<BR/><BR/>The Smith manouvre takes this even further, by borrowing as much as possible from the equity in your home. This seems too risky to me - I would rather just try to strike some kind of balance between paying off debt and having exposure to the market.<BR/><BR/>One rule of thumb is to try and pay off all your debt methodically by the time to retire.Jim Turnbullhttps://www.blogger.com/profile/16141660549510415017noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-30631718686574765552008-11-11T08:56:00.000-05:002008-11-11T08:56:00.000-05:00Thanks for the mention! It is indeed difficult to...Thanks for the mention! It is indeed difficult to post about losses in net worth and portfolio value, but financial results aren't always rosy. As you mentioned, if looking for the long term, this may a great opportunity to deploy some cash.Anonymousnoreply@blogger.com