Another great month on the market as my investment are getting higher and higher. It seems that moving a part of my portfolio into Sprott Equity Canadian fund was a great idea 😉 Hopefully I will continue to have my lucky touch when I select a more international fund! In the meantime, Sprott went public a few weeks ago and a journalist from the Globe and Mail was thinking that Eric Sprott was making so much money out of its companies (in hundreds of million of dollrs) that the fund was better bet than the stock!
So my annualized return rate is now 14.5% while I did paid between 3.5% and 2.75% (a big thanks to the Bank of Canada on this one!) in interest charges. In dollars, I am making a paper profit of $753 minus $189 in interest, so it makes $564. So my net annualized return is therefore 10.8%. Not too bad after a little bit more than a year.
So here are my positions so far:
National Bank Div. fund: 129.639 par at $17.17 for a total of $2225.90.
Sprott Cdn Equity fund: 116.444 par at $50.03 for a total of $5825.69.
I am still making my $400 a month investment even though interest rate went down big time since 2007. There is a part of me wanting to increase my leveraged strategy by at least $200 a month and there is another part saying that I have other debts coming due in less than 3 years and I should leave my Smith Manoeuvre the way it is.
When you are borrowing to invest, it is important to stick with your investment plan. If you start playing with your periodic investments or borrowed money, you might go off track at one point. The temptation is always great when you are actually making money. Everybody wants a piece of the market, right?
I recently read an interesting point of view on the smith manoeuvre strategy written by Frugal Trader at milliondollarourney.com. He is also making his mortgage tax deductible through the SM strategy but he decided to pick his own stocks. The interesting part is that he is using high paying dividend stock in order to cover for his interest charges on the leverage loan (a home equity line of credit – HELOC).
With this strategy, he doesn’t have to take any money from its pocket. Therefore, he is applying leverage at its best: using other people money to make money!
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