Using a HELOC as an investment strategy: not as taboo as you might think + MORE Jul 25th

For the better part of a year, Canadians have been able to earn Bonus Miles on their groceries with AIR MILES Receipts. Over the course of the past few months, we’ve seen this part of the program expand the products you can earn Bonus Miles on, dole out some big bonuses simply for scanning eligible […]
The post AIR MILES Receipts makes it easy to earn more on your grocery shopping appeared first on Rewards Canada.

Air Canada Aeroplan’s partnership with Eurowings was expanded today with the addition of the airline to redemption side of things. As of July 25, 2024 Aeroplan members can now redeem points for flights on Eurowings within Europe and also to/from North Africa and the Middle East. Up until now the partnership between Aeroplan and Eurowings […]
The post Aeroplan adds Eurowings as a redemption partner appeared first on Rewards Canada.

Ask MoneySense
I wish to leverage my HELOC to invest in dividend-paying investments. How would you advise I approach this? Is this an effective tax savings tool? Is there any financial institution or products you would advise?

—Martha

Borrowing from a home equity line of credit

You know, Martha, in some circles, leveraging—or borrowing to invest—is a taboo subject. I find that funny because there is much less controversy when people borrow to:

Buy a car, which depreciates in value;

buy a house, which normally appreciates, but it can decline;

or take a vacation as a lifestyle investment.

So, why is there controversy around borrowing to invest? It is probably due to a lack of understanding, coupled with the fact that when leveraging goes bad, it’s not good.

Let’s talk about leverage. If you borrow $100,000 at 8%, what rate of return would you have to earn on your investments to break even? Would you guess 8%?

Most people would agree with that answer; it sounds logical, right? I mean, if you borrow $100,000 at 8% and paid $8,000 in interest costs then that would mean you would have to make $8,000 on your $100,000 investment to break even, which is 8%…

You know what they say: Cash is king. Whatever you want—be it travel, merchandise, services or anything else—you know you can get it with cash. That’s why cash back credit cards are so popular. They let you earn back money just by using the credit card for your everyday purchases (with some exclusions). Whether you’re after a premium card loaded with perks or a simple student card, there are so many types out there that you’re sure to find one that meets your needs. If you’ve ever wondered how cash back works, you’ve come to the right place.

How earn rates work

When you get a cash back card, you’ll earn a percentage of your purchases back in cash. How much you earn, and on which kind of purchases, depends on the card you have.

Bonus earning categories

Cards may offer different bonuses for different spending categories, perhaps with limitations (such as a cap on points you can earn at the accelerated earn rate). It pays to know exactly how purchases at different retailers are categorized…

Canadians are experiencing rate cut déjà vu today, as the Bank of Canada (BoC) slashed its trend-setting overnight lending rate by a quarter of a per cent. It’s the second rate cut in as many months from the central bank. It implemented its first on June 5, bringing an end to a prolonged, 11-month rate hold and officially putting Canada on track for lower borrowing costs.

What is the Bank of Canada’s interest rate?

This latest decrease brings the central bank’s rate—which sets the benchmark for Canada’s prime rate and variable-rate borrowing products—to 4.5%.Combined with last month’s decrease, the benchmark cost of borrowing in Canada is now down 0.5% and is at its lowest since May 2023.

What does the rate cut mean? Will the interest rate cuts continue?

In the immediate aftermath of today’s rate cut, Canada’s prime rate will decrease from 6.95% to 6.7%, with consumer lenders passing that discount onto their prime-based products, including variable mortgage rates and home equity lines of credit (HELOCs)…