{"id":10714,"date":"2015-08-04T08:38:11","date_gmt":"2015-08-04T13:38:11","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10714"},"modified":"2015-08-04T08:38:11","modified_gmt":"2015-08-04T13:38:11","slug":"low-interest-rates-prompt-savers-to-borrow-to-invest","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10714","title":{"rendered":"Low interest rates prompt savers to borrow to invest"},"content":{"rendered":"<div class=\"story-headline\">\n<h3 class=\"story-title\"><a href=\"http:\/\/www.cbc.ca\/news\/business\/low-interest-rates-prompt-savers-to-borrow-to-invest-1.3172662\" target=\"_blank\">Low interest rates prompt savers to borrow to invest<\/a><\/h3>\n<\/div>\n<p class=\"story-deck\"><strong>Kevin Stone plans to borrow $20K this year to invest in various stocks<\/strong><\/p>\n<p>Kevin Stone is\u00a028 years old and already has over half a\u00a0million dollars\u00a0of debt,\u00a0including a mortgage and a loan to purchase farmland. But he&#8217;s not concerned, because that apparent burden is actually helping\u00a0fuel his roughly $400,000 net worth.<\/p>\n<p>He&#8217;s one of a number of Canadians taking a gamble\u00a0and borrowing money at\u00a0<a href=\"http:\/\/www.cbc.ca\/news\/business\/banks-cut-prime-lending-rates-after-bank-of-canada-slashes-benchmark-rate-to-0-5-1.3152673\" target=\"_blank\">historically low\u00a0rates<\/a>\u00a0not to fuel an excessive lifestyle, but\u00a0to invest in the stock market. It&#8217;s a strategy one financial planner warns isn&#8217;t for everyone, and even seasoned investors can see things go wrong.<\/p>\n<ul>\n<li><a href=\"http:\/\/www.cbc.ca\/news\/business\/the-national-lust-for-home-equity-lines-of-credit-should-we-worry-1.3106533\" target=\"_blank\"><strong>Should we worry about the national lust for lines of credit?<\/strong><\/a><\/li>\n<li><a href=\"http:\/\/www.cbc.ca\/news\/business\/home-equity-lines-of-credit-what-you-need-to-know-1.3108672\" target=\"_blank\"><strong>What you need to know about HELOCs<\/strong><\/a><\/li>\n<\/ul>\n<p>The Bank of Canada recently\u00a0<a href=\"http:\/\/www.cbc.ca\/news\/business\/banks-cut-prime-lending-rates-after-bank-of-canada-slashes-benchmark-rate-to-0-5-1.3152673\" target=\"_blank\">lowered its benchmark lending rate by 25 basis points<\/a>\u00a0for the second time this year. Canada&#8217;s major banks partially followed suit and\u00a0lowered their prime lending rates\u00a0to 2.7 per cent.<\/p>\n<p>These changes caused the rates for already low variable-rate mortgages, as well as home equity\u00a0and personal\u00a0lines of credit,\u00a0to fall.<\/p>\n<p>The low rates prompted Harry,\u00a0an Albertan in his 40s\u00a0who requested his last name not be used for privacy reasons, to look at his\u00a0$100,000 home equity line of credit, or\u00a0HELOC,\u00a0a different way.<\/p>\n<p>He plans to use that money over the next several years to maximize his unused\u00a0RRSP\u00a0contribution room. He&#8217;s withdrawn funds from his\u00a0HELOCbefore to pay for a few vacations, but this will be his first time borrowing the money for investments.<\/p>\n<p>Harry\u00a0plans to use his annual tax returns as large, lump-sum payments against the loan, while paying down the remaining balance at a low 2.2 per cent interest rate.<\/p>\n<p>&#8220;I think the bigger risk is not using other people&#8217;s money to invest,&#8221; says Stone, who\u00a0blogs\u00a0about his money maneuvers\u00a0at\u00a0<a href=\"http:\/\/www.freedomthirtyfiveblog.com\/\" target=\"_blank\">Freedom Thirty Five<\/a>,\u00a0where he doesn&#8217;t shy away from aiming to\u00a0join\u00a0<a href=\"http:\/\/www.cbc.ca\/news\/canada\/who-are-canada-s-top-1-1.1703321\" target=\"_blank\">Canada&#8217;s one per cent<\/a>. &#8220;By taking on these debts today, I can have a longer time to build up my assets.&#8221;<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Low interest rates prompt savers to borrow to invest Kevin Stone plans to borrow $20K this year to invest in various stocks Kevin Stone is\u00a028 years old and already has over half a\u00a0million dollars\u00a0of debt,\u00a0including a mortgage and a loan to purchase farmland. But he&#8217;s not concerned, because that apparent burden is actually helping\u00a0fuel his [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[942,103,3544,3000,6614,7829,1154,4190,7828,7827,6018,1138],"class_list":["post-10714","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-canada","tag-canada","tag-cbc","tag-cbc-news","tag-equity","tag-home-equity-line-of-credit","tag-interest-rate-policy","tag-investing","tag-line-of-credit","tag-low-interest-rates","tag-rrsp","tag-stock-market"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10714","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10714"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10714\/revisions"}],"predecessor-version":[{"id":10715,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10714\/revisions\/10715"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10714"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10714"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10714"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}