My first online video
If you start investing in your 20s, there are 2 practical ways you can become a millionaire by your 30s. One way is to save a lot of money. But this requires a very high income. The second way is more relatable to the middle class, which is to increase your investment rate of return. How do you make higher investment returns?
That’s what I discuss in my first YouTube video. 🙂 You can watch it by clicking here or take a look below.
If you would like to listen to the audio only like a podcast, you can download the mp3 or use the media player below. 🙂
Earn high investment returns without the high risk
The idea is to buy relatively stable investments, and use cheap credit to greatly enhance the returns without exposing your portfolio to riskier assets. This creates a very high risk-adjusted return. And the longer the cost of borrowing stays low, the more effective this strategy will become. The good news is that economists don’t expect the Federal Reserve will raise interest rates until at least 2024.
But leverage should only be used under the right economic and personal conditions. Here are some guidelines to keep in mind.
1. Make sure you can borrow at a low cost.
2. Only buy high quality assets.
3. Hold for a minimum of 10 years.
Let me know if you have any feedback on the video so I can make better content next time. You can check out my new YouTube channel if you want to follow me there. 🙂 Feel free to request any specific topics you’d like me to cover in the future.
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Putting my money where my mouth is
Last Friday I used 8x leverage to buy 50 shares of Alimentation Couche-Tard stocks (ATD.B) in my TFSA.
I only had $235 in my account.
But I needed $1,875 to buy 50 shares. So I borrowed the rest from my line of credit.
Once again I am using other people’s money to invest. I will explain the details of this transaction and a full stock analysis of ATD.B next week. 😀
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Random Useless Fact:
Great first video Liquid. Love the blog, its been very helpful as I started my own investment journey.
Question. What type of account would you typically hold equities in that you purchased with leverage? Would you primarily borrow money for equities held in your TFSA, RRSP or an unregistered account?
Thanks again for all the great content!
I normally apply leverage in my regular non-registered account for Canadian dividend paying stocks. If it’s US based stocks I would probably buy it in my RRSP in a US dollar account. But it depends. I recently used some leverage in my TFSA by contributing money borrowed from a line of credit. I did this because I have unused contribution room in my TFSA, it was a time sensitive investment, and I didn’t have enough cash savings.
Great video. Thanks for starting your blog back up. It’s one of my favourites and I have been doing many of the same things you are. What are your thoughts around the use of options?
I’m a big fan of options. I think it’s a great income strategy for investors with a large enough portfolio. Selling puts or calls can be a stable way to generate controlled cashflow if done correctly. Lots of people use the iron condor on stocks with low volatility. Just have to watch out for high fees on transactions and assignments.
Thanks for a great video just added you to my list of blogs I’m following. I didn’t realize how low IB rates were (not worth it on Questrade). My house is paid off so I was lucky enough to HELOC in April CAD div paying stocks in a non reg account with a nice 20% ROI at the end of 2020. Most of my portfolio is CCP (RRSP is 100% VTI). I am currently debating a USD non reg div on margin as my Canadian assest allocation is getting high. Looking forward to more videos!
Thanks. I think it’s a good idea to be globally diversified. VTI is a great fund.
Do you never worry about a margin call or your brokerage calling in their chips?
I try to maintain at least $50K of margin requirement. With this buffer I never worry about a margin call. 🙂
See under “margin risk” in this spreadsheet for more details: I am well into the green range at this time. https://www.freedomthirtyfiveblog.com/progress/stress-test