Using Your Home to Buy Stocks?

What happens if you borrow to invest, and lose?

Ian Tam, CFA 12 July, 2021 | 3:02AM
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The Bank of Canada’s current interest rate sits at 0.25% - the lowest it’s been for a very long time. All other interest rates (bank prime rates, mortgage rates, automobile finance and leasing rates) are based off of this core figure. What this means is that right now, money is cheap.

At the same time, the equity market is going gangbusters. The average Canadian domiciled global equity fund has returned a stellar 33.2% after fees on a trailing 12-month basis. This, in combination with social media and the rise of meme stocks, have likely prompted some investors to do what seems obvious – borrow to invest.

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About Author

Ian Tam, CFA  is Director of Investment Research at Morningstar Canada. 

 

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