Brian Orlando

But I see a lot of people just leveraging up on debt that are barely paying the bills and then also doing the situation and then investing in whatever it is, like covered call ETFs and stuff like that, which are debatable by the CRA as well, whether they're

actually sufficient to be income producing because a lot of it's actually return of capital.

So it's a lot of these things and people are getting audited by the CRA in a lot of these positions.

Maybe it's getting called away where the CRA is saying, actually, you can't deduct this interest because you didn't set this up right.

You didn't actually trace your funds.

You're actually doing a lot of trading in this account and it's really hard to follow through like this debt that you borrowed and then you've bought this and then you sold that and then you bought this and...

And really, I think a lot of people are adding a lot of complexity, a lot of risk, especially with, you know, Cape being so high right now to the US.

It's hard to anticipate returns to continue as strong as they have.

Again, I'm not calling for a crash or anything like that, but it's just these situations where people are ever increasing complexity, cost of maintenance to maintain these positions.

I think it can be a benefit if you're already in such a good financial situation and you're just looking maybe to optimize a little bit more, but I see a lot of Canadians doing it in situations where it just does not make sense because they're kind of living paycheck to paycheck, not saving, not maxing out their tax shelters, not doing the basics.

I would always recommend to do those first.

So essentially, you're building up equity as you pay down your mortgage.

It's not as efficient, let's say, just because it's personal debt, so you can't deduct that or anything.

But as you build up your equity in your home, you're taking out a home equity line of credit on your equity that you've built up over time, creating that line of credit, and then taking that chunk of money from the line of credit

And then moving that into some income producing asset.

A lot of people do real estate, obviously, with that money.

There's cash damming strategies too, as well.

But I see a lot of people just taking that and investing it in non-registered accounts and Canadian dividend payers for the most part, but a lot of return of capital style option, like covered call ETFs.

Really, what you're doing, again, is taking your rental property and you're kind of like you're instead of taking the funds from the rent itself, you're actually increasing the debt on that property over time as you're paying off the mortgage and everything like that.

You're flipping that mortgage down payment back into a home equity line of credit.