Back in September, I announced that I would post on my Smith Manoeuvre strategy on a monthly basis anymore. Believe it or not, it was not related to what was happening on the market. The proof is that I am still posting my result and the market is still bad. I actually found it heavy to comment month after month a strategy that will last for 10 years and more. So here is the final result after almost 2 years.
I have made monthly investment in the National Bank Dividend mutual funds and the Sprott Canadian Equity funds. Over the past 2 years, I have made a total investment of $10,100. This money was taken out of a separate HELOC to make sure that interest is tax deductible. Borrowing cost for 2008 has been $198.73. Therefore, I should receive a tax return of $83. Barely enough to buy 2 good bottles of wine
I have encountered difficulties when asking for additional credit at my bank. The main reason was that they didn’t understand the strategy and therefore thought that I had been paying interest only on my mortgage without making any capital reimbursements. They didn’t want to understand the link between my brokerage account and the borrowed amount on my second HELOC account.
I was able to get what I wanted but it wasn’t without pain, a lot of documentation and explanation! Considering the current economy, I can’t blame them; all they were seeing is a young kid with a big line of credit maxed out for 2 years.
I was supposed to invest into international funds in order to diversify my risk and optimize my long term yield. While I am still wondering if I’m better with ETF’s or specialized funds, I decided to not budge. The Problem with ETF’s is that I can’t buy them on a monthly basis. I would have to wait until I have sufficient money to buy at least 100 shares. The thing is that I don’t want to put my SM monthly contribution into a money market fund. I should probably go with index funds in the meantime then.
I was a bit disappointed with the annualized return that my account shows after almost 2 years of investment. I actually have a negative annualized return of -27% since February 2007.
Hopefully 2009 will be a better year for all of us in regards to the stock market!
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