Pay Yourself first - Investment thoughts

[vandriani]

I was completing my tax return last night and a few thoughts came to mind:

1. This is last time I do that, I`ll be calling Navaz for next year.
2. Was it smart to do following or should I have done something else?

I have be following the theory of pay yourself first and putting aside 10% of my pay cheque every month.
I decided to use the money to buy GICs in order to reduce taxes.

I wondering if is was better to pay down more of my person resident mortgage instead.
I could then use the equity gain to increase our HELOC and purchase more properties.
The interest incurred on the HELOC is then written off.

Is this thought process correct?

Please provide your comments, thoughts and/or alternative options.

 

[JimWhitelaw]

Short answer: Yes, your thinking is correct. Make sure to separate and keep good records of what borrowed money you use for investment and for personal use - don`t mix them or you could lose tax deductibility.

 

[gwasser]

QUOTE (vandriani @ Apr 20 2010, 10:21 AM) I was completing my tax return last night and a few thoughts came to mind:

1. This is last time I do that, I`ll be calling Navaz for next year.
2. Was it smart to do following or should I have done something else?

I have be following the theory of pay yourself first and putting aside 10% of my pay cheque every month.
I decided to use the money to buy GICs in order to reduce taxes.

I wondering if is was better to pay down more of my person resident mortgage instead.
I could then use the equity gain to increase our HELOC and purchase more properties.
The interest incurred on the HELOC is then written off.

Is this thought process correct?

Please provide your comments, thoughts and/or alternative options.

If you work with an accountant, I strongly advice you take the time to meet with him/her in person. Ask yourself whether you feel comfortable with that person, just like you do with everyone else on your team. Tell the accountant about your future financial plans and make sure he is well versed in several areas such as small business, real estate and paper securities such as stocks, bonds and mutual funds and flow through shares.

My experience is that a large number of accountants are specialized, e.g. in small business - over the long term this is too limited and you end up switching accountants like socks. I got once charged $500 so the accountant could study up on mutual funds. Excuse me! That is unacceptable to me. Working with an accountant is a long term relationship and he/she will have all your past tax records/issues at his finger tips.

If you can not meet in person, at least have a long conference call. Technology such as Skype make this very easy to set up and it is cheap if not free.

There are many issues regarding how to set up your investment plan. I think you have some good ideas, but you will have to flesh them out yourself in more detail. For a general view on investing visit my blog, it has now over 30 postings about all kinds of investment stuff. Also read books on personal finance. I guess, you`ve done that already a bit as you are `paying yourself first`.

Hope this helps,