Quote:
Originally Posted by MoneyGuy
Done correctly, this is not such a bad idea. I do it myself and have a few leveraged clients. But, I agree, proceed cautiously.
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This along with the Slava's comments pretty much summarize the difference between the wealthy and the middle class people I know. The wealthy people I know use credit in a manner like this. They use it to invest, and in a way so that it is tax deductable. Many of them also use it quite significantly. When they do their profit taking, thats when they buy a nicer vehichle, go on a trip, or upgrade their primary home (after they pay the taxes too). But the key is that the investing part has to be correctly and the individual has to be very disciplined in terms of spending.
Realistically it's no different than not buying stuff you don't need and being fiscally disciplined. Difference is that you do assume some risk, but do so having a very calculated and proven way to get rewarded. If done properly (and with the help of a real professional)...rather than save $1000 every month above and beyond your RRSP's and stuff it in a bank account where you get zero interest or in another non RRSP investment thats going to be taxed as a gain or income, you used that money to pay interest on a much bigger chunk of money thats tax deductable and grows at the same rate. Plus you will get a tax credit on the interest that you can reinvest.