<I was just asking if anyone was using this tax reduction strategy and what they thought of it.>The tax saving aspects do make it something to consider. If you pull out a tax form, you'll note that the interest deduction occurs in the same part of the form as the RSP deduction. And because you're outside the RSP you don't have to put up with the restrictions on foreign investment, and you get further tax breaks (compared to pulling money out of an RSP) for dividend treatment (but only if you're in Canadian stocks; so you're tubing the foreign benefit side) and capital gains (but if you're selling regularly, you're losing the tax-free compounding that being inside the RSP offers).One of the early books I read on financial planning suggested borrowing as a way of forced savings. (Eg, you borrow $1000, and then pay it off over time; and you build a credit rating, too.) You have to be disciplined enough (and secure enough in your employment) to be sure you will make the regular payments, and that you can sleep at night if the market turns badly against you.<How is it that 'Margin' is more risky than normal investing? If you have a locked in term on your loan, and are investing in solid growth stocks for long term capital gains, it seems like a no brainer!>I can't re-emphasize Palsan's warning enough. That you even ask the question is another indication of how dangerous the market has become.You're right that a term loan will minimize the interest rate risk, but that's not the point.Before I get onto margin, how do you know you'll find a growth stock that will go up? The RuleMaker bought Coke: it's done nothing for them. Or Gillette. Or, at times, Starbucks.Margin is risky because of this: Borrow $1000; add it to $1000 or your own money and buy, say, Nortel. Nortel goes up; no problem; let's say it doubles, to $4000. Your rough return on investment (ignoring the repayments you've been making): $4000 total less $1000 to repay lender, leaves you with $3000 divided by original investment of $1000, gives return of 300%.But, same scenario, Nortel drops 50% (can't happen? try 1970, 1973-4, 1987, 1990, 1992, 1994, 1997, 1998 and a bit in 1999, for various stocks or the market as a whole). Now it's only worth $1000. You sell, repay loan in full (whew! good thing you were only using 50% margin! the losses are worse if your proportion of borrowed money is higher). But you've lost all your own money: *all*, *100%*.Non-margined scenario: Use $1000 of own money. Buy Nortel. Doubles. Return is 100%. Nortel drops 50%, loss is $1000 - $500 = 50%. Not great, but not a total loss, either.So follow Turner's strategy. You won't panic and sell in a downturn, will you?..will you?......will you?How do you know?DonIt is a strategy to consider, but please don't underestimate the risk involved. It is a *risky* strategy. But it's great for mutual fund salespeople, who get those huge commissions on the $100,000 purchases that Turner contemplates, instead of those measly commissions of $1000 here and $1000 there.
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