Bank of Nova Scotia T.BNS

Should I borrow to buy BNS?

[carlocarli]

At the current share price (79.75), BNS' dividend yeld exceeds 5%. I can draw funds from a secured line of credit at 2.5% (variable rate). I would say that it is fairly safe tp borrow at 2.5% to invest at 5%. The downside risks are a steep increase or my borrowing rate and a continuing slide of the market. Am I missing anyrhing? Is the risk too great? Any thoughts?

[FiddyFiddyOddz]

Take the loan for BNS shares through your margin account, doing so makes the load "eligible".. In other words, you will get a partial rebate on the interest you paid come tax time since the interest was for an investment loan... Carl wrote:"At the current share price (79.75), BNS' dividend yeld exceeds 5%. I can draw funds from a secured line of credit at 2.5% (variable rate

[whodathunkit]

It doesn't have to be through a margin account to be tax deductable.  It just has to be borrowed to earn taxable income.  Where ever you can get your cheapest rates is where you should borrow.  Keep in mind taxable income means through a non registered account.  Borrowing to put into your RRSP or TFSA is not tax deductable. Cheers.

[Etstedesco]

Don't pull the trigger just yet. Might see a lower share price yet this week. That will save you money right from the start. Good luck. Always run the DRIP if your a long hauler. It's worked great for me. 

[dileas48s]

Yes, or consider buying in tranches.  Tough to say how long this slump might go. Also, you are free to borrow the money from anywhere to use the interest tax deduction, but I would highly recommend you don't "co-mingle" the money you borrow to invest with the money to borrow to pay bills, or whatever else you might borrow money for.  You must be able to clearly identify

[carlocarli]

Thank you Etstedesco. Yes, I am in for the long term and I always reinvest the dividends.

[Dibah420]

I don't think borrowing to play the market is a smart idea.  But then, what would I know,  I am "old school".  I remember reading that folks in Toronto are buying second and third properties while putting the down payments on their plastic. Not a week goes by without some myterious offer in my mailbox to buy my watefront property sight  unseen.  I have

[dileas48s]

I agree completely.  Investors have to measure the risk and act accordingly.  I did 90% of my borrowing from April 2020 to January 2021.  100% into dividend paying stocks.  My average yield on cost was around 6.8% but today the yield is around 5.1% until the banks finish doling out their raises. The leveraged portfolio is up 28% in total, including reinvested dividends and

[carlocarli]

Sincere thanks to everyone who responded to my post. All contributions were well reasoned and helped me make up my mind. I will see which way the share price head during the rest of the week and I will make a move if I get the opportunity (low price level). Thanks also for the tax deductibility tips. Good luck to all