Comments on: The Basics Of The Smith Manoeuvre http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm The Canadian Source For Personal Finance Wed, 08 Sep 2010 14:11:24 +0000 hourly 1 http://wordpress.org/?v=abc By: MelissaV http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-9060 MelissaV Mon, 06 Sep 2010 17:14:34 +0000 http://canadianfinanceblog.com/?p=614#comment-9060 I am a client of Robinson Smith (son of Fraser Smith) and I started the Smith Manoeuvre over a year ago. It is working tremendously well for us. The problem is that other well-meaning financial advisors will try to recreate how they believe it works using their own investment preferences. Robinson Smith is working to put a patent on the name "Smith Manoeuvre" so that only certified and trained people can set up the Smith Manoeuvre rather than try their hand at what they think it is and give the Smith Manoeuvre a bad name when it does not turn out the way they had hoped. I am a client of Robinson Smith (son of Fraser Smith) and I started the Smith Manoeuvre over a year ago. It is working tremendously well for us. The problem is that other well-meaning financial advisors will try to recreate how they believe it works using their own investment preferences.
Robinson Smith is working to put a patent on the name “Smith Manoeuvre” so that only certified and trained people can set up the Smith Manoeuvre rather than try their hand at what they think it is and give the Smith Manoeuvre a bad name when it does not turn out the way they had hoped.

]]> By: Consumer Debt Paid Off, Now What? http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-8196 Consumer Debt Paid Off, Now What? Mon, 19 Jul 2010 14:30:11 +0000 http://canadianfinanceblog.com/?p=614#comment-8196 [...] After those savings accounts are setup and we get some money put away, the next thing we have to accomplish is paying down the mortgage, freeing up more HELOC room for investing through a Smith Manoeuvre. [...] [...] After those savings accounts are setup and we get some money put away, the next thing we have to accomplish is paying down the mortgage, freeing up more HELOC room for investing through a Smith Manoeuvre. [...]

]]> By: Actual Policy - Canada http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-7707 Actual Policy - Canada Sat, 26 Jun 2010 20:48:08 +0000 http://canadianfinanceblog.com/?p=614#comment-7707 [...] by financial planners which is known as "The Smith Manoeuvre". I found a link here: The Smith Manoeuvre The basics of it are that as you make a payment on your mortgage, the equity portion repaid is [...] [...] by financial planners which is known as "The Smith Manoeuvre". I found a link here: The Smith Manoeuvre The basics of it are that as you make a payment on your mortgage, the equity portion repaid is [...]

]]> By: Felix http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-7687 Felix Sat, 26 Jun 2010 05:48:22 +0000 http://canadianfinanceblog.com/?p=614#comment-7687 Something to be aware of as I found out the hard way when I went to lease a vehicle with an R1 credit rating and was declined. Most banks, including mine (RBC), report the balance of the Line of Credit portion of your mortgage to Equifax and Transunion, which hammers your credit score and limits your access to credit outside your mortgage. Even with an R1 credit rating, lenders will get very nervous when they see that you have a large line of credit on your credit bureau report. This is based on my own personal experience. Make sure you don't need access to other forms of credit if you have a large balance on the LOC portion of your mortgage. It will be very hard to obtain other credit. Something to be aware of as I found out the hard way when I went to lease a vehicle with an R1 credit rating and was declined. Most banks, including mine (RBC), report the balance of the Line of Credit portion of your mortgage to Equifax and Transunion, which hammers your credit score and limits your access to credit outside your mortgage. Even with an R1 credit rating, lenders will get very nervous when they see that you have a large line of credit on your credit bureau report. This is based on my own personal experience. Make sure you don’t need access to other forms of credit if you have a large balance on the LOC portion of your mortgage. It will be very hard to obtain other credit.

]]> By: Are Stocks A Good Investment and Frugal Father's Day Gift Ideas http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-6357 Are Stocks A Good Investment and Frugal Father's Day Gift Ideas Mon, 17 May 2010 19:46:26 +0000 http://canadianfinanceblog.com/?p=614#comment-6357 [...] The Dollar included The Basics Of The Smith Manoeuvre in this week’s Money Hacks [...] [...] The Dollar included The Basics Of The Smith Manoeuvre in this week’s Money Hacks [...]

]]> By: Craig W http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-3170 Craig W Tue, 19 Jan 2010 00:37:59 +0000 http://canadianfinanceblog.com/?p=614#comment-3170 Dimitri, your solution in my opinion is too narrow and places your clients solely in one market - real estate. Good investment advisors would never recommend a strategy that lacks diversification of some sort. Even during this last correction, investors with foresight have retained the value of their assets by prudent diversification. An acute real estate correction (not experienced in Canada this time around) would devastate clients should the choose your strategy alone. "HELOC in not 3% anymore but 7%, and your investments were not performing that great." An increase in interest rates coupled with poor performance investment across the board seldom occurs because probably diversified assets would gain traction from the instruments driving the interest rates ( money markets, bond markets etc). In the scenario you are warning against real estate would most certainly be as vulnerable as any other investment. What about lending guidelines for the average person? For someone to qualify for 3 new mortgages in your example they would have to have an existing income far above the average vs a client who is merely qualifying for a single mortgage on their existing property as is required with the Smith Manoeuvre. Few people calculate the time factor involved in managing multiple properties vs a mutual find portfolio and residential tenancy laws do not always favour swift resolution to conflict which can leave clients with serious cash flow challenges. I do not believe this is an either or argument, it depends on the clients situation entirely. Dimitri, your solution in my opinion is too narrow and places your clients solely in one market – real estate. Good investment advisors would never recommend a strategy that lacks diversification of some sort. Even during this last correction, investors with foresight have retained the value of their assets by prudent diversification. An acute real estate correction (not experienced in Canada this time around) would devastate clients should the choose your strategy alone.
“HELOC in not 3% anymore but 7%, and your investments were not performing that great.” An increase in interest rates coupled with poor performance investment across the board seldom occurs because probably diversified assets would gain traction from the instruments driving the interest rates ( money markets, bond markets etc). In the scenario you are warning against real estate would most certainly be as vulnerable as any other investment.
What about lending guidelines for the average person? For someone to qualify for 3 new mortgages in your example they would have to have an existing income far above the average vs a client who is merely qualifying for a single mortgage on their existing property as is required with the Smith Manoeuvre.
Few people calculate the time factor involved in managing multiple properties vs a mutual find portfolio and residential tenancy laws do not always favour swift resolution to conflict which can leave clients with serious cash flow challenges.
I do not believe this is an either or argument, it depends on the clients situation entirely.

]]> By: Jess V. http://canadianfinanceblog.com/2009/06/09/the-basics-of-the-smith-manoeuvre.htm/comment-page-1#comment-2491 Jess V. Wed, 02 Dec 2009 21:43:34 +0000 http://canadianfinanceblog.com/?p=614#comment-2491 I have a different strategy. 1. First I used the equity to buy a property and then convert it to a rental property 2. Then I convert that unit into smith manuver by paying of the mortgage and just have the HELOC instead. That frees up a monthly cash and have an equity 3. I use the equity to get a leverage loan 3 for 1. i.e. ($30,000 x 3 = $60,000)total $90,000 invested in Mutual funds that pays a distribution. 4. Then I take RSP loan to max my contribution. The Income from the mutual fund pays the rsp loan 5. The income from property pays the leverage loans 6. The interest from the HELOC, Leverage Loans, and RSP loan are all tax deductable. 7. The tax return will pay the HELOC, Leverage and RSP loan. Once I developed enough equity on this Unit, I will repeat this process. .-= Jess V.´s last blog ..<a href="http://www.theautomatedmoneymachine.com/blog/2009/08/03/how-to-use-a-2-toll-free-number-to-maximize-productivity" rel="nofollow">How to use a $2 Toll Free number to maximize productivity</a> =-. I have a different strategy.

1. First I used the equity to buy a property and then convert it to a rental property

2. Then I convert that unit into smith manuver by paying of the mortgage and just have the HELOC instead. That frees up a monthly cash and have an equity

3. I use the equity to get a leverage loan 3 for 1. i.e. ($30,000 x 3 = $60,000)total $90,000 invested in Mutual funds that pays a distribution.

4. Then I take RSP loan to max my contribution. The Income from the mutual fund pays the rsp loan

5. The income from property pays the leverage loans

6. The interest from the HELOC, Leverage Loans, and RSP loan are all tax deductable.

7. The tax return will pay the HELOC, Leverage and RSP loan.

Once I developed enough equity on this Unit, I will repeat this process.
Jess V.´s last blog ..How to use a $2 Toll Free number to maximize productivity

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