brattatat Posted June 9, 2020 Report Share Posted June 9, 2020 Would it be prudent to invest like 30k of my LOC at the prime -0.25 rate (Scotia) into index funds? Would I be making more money overtime or would the interest end up costing more than the return on investment? If any resident/physician has done this in their time, would be great if I could get some information. Quote Link to comment Share on other sites More sharing options...
VivaColombia Posted June 9, 2020 Report Share Posted June 9, 2020 Threw about 100k into the stock market (diversified) at the end of March when the market tanked. Split it between TFSA and regular account evenly since i never used my TFSA contribution room. I took a huge risk but I've made huge gains but the market could have gone the other way and I'd be in 100k more debt. I think its up to personal risk tolerance, if you feel you can validate and live with the wins or potential losses, go for it! w8list and dooogs 2 Quote Link to comment Share on other sites More sharing options...
dooogs Posted June 9, 2020 Report Share Posted June 9, 2020 16 minutes ago, VivaColombia said: Threw about 100k into the stock market (diversified) at the end of March when the market tanked. Split it between TFSA and regular account evenly since i never used my TFSA contribution room. I took a huge risk but I've made huge gains but the market could have gone the other way and I'd be in 100k more debt. I think its up to personal risk tolerance, if you feel you can validate and live with the wins or potential losses, go for it! Especially if you feel like you have a safety net it it goes wrong. Can someone help you out ? Edit: meant it for OP Quote Link to comment Share on other sites More sharing options...
offmychestplease Posted June 9, 2020 Report Share Posted June 9, 2020 - Quote Link to comment Share on other sites More sharing options...
anonymouspls Posted June 9, 2020 Report Share Posted June 9, 2020 Do not invest money from your LoC into the stock market, not ever and especially not right now (we are in a particularly volatile moment in time). I have about $30K in equities but it's all from money I made before medschool. Really I cannot stress how stupid and dangerous it is to spend LoC money on the market, in my opinion. This advice does not apply if your family is rich and can support you. But even then, It's not a smart play but not as catastrophic I suppose. Quote Link to comment Share on other sites More sharing options...
anonymouspls Posted June 9, 2020 Report Share Posted June 9, 2020 6 minutes ago, offmychestplease said: Stock ticker IMRN was selling for $2/share yesterday.....today it miraculously hit a peak of $28/share, which is a 14x gain in 1 day. If you had balls and used all 350K of your LOC and bought IMRN shares....and sold today at the high you would have turned your 350K into 5 million dollars. Now you ask what if you didn't know that IMRN would go up like crazy? Fair. Let's say you simply watched the stock today as it was rising and you bought all your shares at $8/share....waited a couple hours and sold at $28/share, you would have turned your 350K into 1.2 million dollars. Of course this takes massive balls to use all your LOC into one stock, but the potential is there to literally make millions... Ya and it's just as likely that you get stuck in some pump and dump scheme and buy in at $8 before the stock crashes back down to $2 or less. From what I understand IMRN was awarded some navy contract for developing drugs to combat diarrhea, which is why it shot up. You could have made a lot of money if you knew this yesterday, but unfortunately for us common folk time in the market > timing the market QueenStan and w8list 2 Quote Link to comment Share on other sites More sharing options...
offmychestplease Posted June 9, 2020 Report Share Posted June 9, 2020 - Quote Link to comment Share on other sites More sharing options...
offmychestplease Posted June 9, 2020 Report Share Posted June 9, 2020 - Quote Link to comment Share on other sites More sharing options...
VivaColombia Posted June 9, 2020 Report Share Posted June 9, 2020 14 minutes ago, offmychestplease said: Stock ticker IMRN was selling for $2/share yesterday.....today it miraculously hit a peak of $28/share, which is a 14x gain in 1 day. If you had balls and used all 350K of your LOC and bought IMRN shares....and sold today at the high you would have turned your 350K into 5 million dollars. Now you ask what if you didn't know that IMRN would go up like crazy? Fair. Let's say you simply watched the stock today as it was rising and you bought all your shares at $8/share....waited a couple hours and sold at $28/share, you would have turned your 350K into 1.2 million dollars. Of course this takes massive balls to use all your LOC into one stock, but the potential is there to literally make millions... I have a high risk tolerance but I cannot fathom investing a full 350k into one stock like you've described here... Quote Link to comment Share on other sites More sharing options...
VivaColombia Posted June 9, 2020 Report Share Posted June 9, 2020 11 minutes ago, anonymouspls said: Do not invest money from your LoC into the stock market, not ever and especially not right now (we are in a particularly volatile moment in time). I have about $30K in equities but it's all from money I made before medschool. Really I cannot stress how stupid and dangerous it is to spend LoC money on the market, in my opinion. This advice does not apply if your family is rich and can support you. But even then, It's not a smart play but not as catastrophic I suppose. even though i have family backing, I would not recommend doing high risk investing if it keeps you up at night and have family obligations. For context, I'm single, not married, and have a decent amount of savings to (partially) swallow a 100k loss. My risk tolerance is higher than others but again depends on personal responsibilities. If I had an SO, or even was taking care of my parents, I would not have invested 100K just like that. Its not for everyone but if you do take the risk, you have to live with the possibility you lose everything Quote Link to comment Share on other sites More sharing options...
dooogs Posted June 9, 2020 Report Share Posted June 9, 2020 I think the only scenario it makes sense is if your family is rich and is willing to help you if it doesn't work Quote Link to comment Share on other sites More sharing options...
klamar Posted June 9, 2020 Report Share Posted June 9, 2020 11 minutes ago, anonymouspls said: Do not invest money from your LoC into the stock market, not ever and especially not right now (we are in a particularly volatile moment in time). I have about $30K in equities but it's all from money I made before medschool. Really I cannot stress how stupid and dangerous it is to spend LoC money on the market, in my opinion. This advice does not apply if your family is rich and can support you. But even then, It's not a smart play but not as catastrophic I suppose. I don't know your financial situation of course but fundamentally there is no real difference between 1. taking money from a LOC to invest in equities and 2. choosing not to pay off LOC with earned cash, and instead investing that earned cash in to equities JohnGrisham and w8list 2 Quote Link to comment Share on other sites More sharing options...
offmychestplease Posted June 9, 2020 Report Share Posted June 9, 2020 - Quote Link to comment Share on other sites More sharing options...
VivaColombia Posted June 9, 2020 Report Share Posted June 9, 2020 1 minute ago, offmychestplease said: thy myth that you could lose it it all makes no sense...there is something called a stop loss, and you can even sell at any second you want to....stocks don't do from 10 to 0 in an instant... You're right...I just meant to say that you have to live with the possibility you lose money and not necessarily make any money. High risk investing with LOCs is a big gamble Quote Link to comment Share on other sites More sharing options...
1D7 Posted June 9, 2020 Report Share Posted June 9, 2020 37 minutes ago, offmychestplease said: Stock ticker IMRN was selling for $2/share yesterday.....today it miraculously hit a peak of $28/share, which is a 14x gain in 1 day. If you had balls and used all 350K of your LOC and bought IMRN shares....and sold today at the high you would have turned your 350K into 5 million dollars. Now you ask what if you didn't know that IMRN would go up like crazy? Fair. Let's say you simply watched the stock today as it was rising and you bought all your shares at $8/share....waited a couple hours and sold at $28/share, you would have turned your 350K into 1.2 million dollars. Of course this takes massive balls to use all your LOC into one stock, but the potential is there to literally make millions... Yeah but that's basically buying a winning lottery ticket. It's pretty rare day to day that this happens to any single stock—the vast majority of triple digit % gains are made overnight. The opposite also happens with top gainers on other days. You do see drops of 20% in seconds, and those are far more common than seeing 1000% increases in a single day. blah1234 1 Quote Link to comment Share on other sites More sharing options...
blah1234 Posted June 9, 2020 Report Share Posted June 9, 2020 11 minutes ago, 1D7 said: Yeah but that's basically buying a winning lottery ticket. It's pretty rare day to day that this happens to any single stock—the vast majority of triple digit % gains are made overnight. The opposite also happens with top gainers on other days. You do see drops of 20% in seconds, and those are far more common than seeing 1000% increases in a single day. There are definitely people who do well with leveraged investing or single stock investing (I even know a few). However, I know far more people that have lost significant amounts doing this. In the end it's about risk tolerance but I'm a big subscriber to the modern portofolio theory so I think I'll just end up with boring investments. I think you can end up in a great place just by playing it safe. I don't need the swings to get me there faster/earlier as I would rather not deal with the downside. dh. and VivaColombia 2 Quote Link to comment Share on other sites More sharing options...
1D7 Posted June 9, 2020 Report Share Posted June 9, 2020 To answer OP's question you may do decent with leveraged index funds and blue chip tech. While you are likely to make money than lose money doing this, invest only what you can afford to lose. brattatat 1 Quote Link to comment Share on other sites More sharing options...
brattatat Posted June 9, 2020 Author Report Share Posted June 9, 2020 1 hour ago, 1D7 said: To answer OP's question you may do decent with leveraged index funds and blue chip tech. While you are likely to make money than lose money doing this, invest only what you can afford to lose. This is what I needed, thank you! Quote Link to comment Share on other sites More sharing options...
brattatat Posted June 9, 2020 Author Report Share Posted June 9, 2020 2 hours ago, blah1234 said: There are definitely people who do well with leveraged investing or single stock investing (I even know a few). However, I know far more people that have lost significant amounts doing this. In the end it's about risk tolerance but I'm a big subscriber to the modern portofolio theory so I think I'll just end up with boring investments. I think you can end up in a great place just by playing it safe. I don't need the swings to get me there faster/earlier as I would rather not deal with the downside. I agree I prefer boring investments. So should I invest my LOC into those? Quote Link to comment Share on other sites More sharing options...
1D7 Posted June 9, 2020 Report Share Posted June 9, 2020 Using your LOC it is not possible to go with highly safe investments since interest on your LOC will likely outpace gains. And to just to re-address offmychestplease's post that makes it seem like there's risk-free money out there, yes you can lose everything when playing risky. People who invested in WTI oil futures contracts when they were $0 (thinking it couldn't go lower) were completely fucked when it went into the negatives. People who invested in XIV thinking it was free money lost everything liquidated. More recently there was a pump and dump in May with UAVS where after a conference call dispelled rumours regarding a possible partnership with Amazon, trading was frozen (i.e. you couldn't get out) and investors who bought during the hype took a 40-60% loss. Oil futures briefly went into the negatives recently, forcing people who owned these futures to pay out. An analogous situation would be a supermarket selling you food by paying you money to take it. Image above shows XIV"s rise and fall to zero. This was believed to be a reliable investment, especially during its twilight years when it had a massive run-up. The image above shows UAVS run up after days of double/triple digit growth. Hours later after a conference call, trading was halted and the stock price dropped over 50%. Can you make money investing? Certainly. Can you do it without risk? No. Should you make YOLO all-in plays with LOC money? Probably not. In general I do think everyone who can afford to, should learn to invest because it will make retiring (or achieving financial freedom) much easier and less stressful. Quote Link to comment Share on other sites More sharing options...
offmychestplease Posted June 9, 2020 Report Share Posted June 9, 2020 - Quote Link to comment Share on other sites More sharing options...
VivaColombia Posted June 9, 2020 Report Share Posted June 9, 2020 31 minutes ago, offmychestplease said: I'm talking about day trading...when you day trade you have the share price update in front of you every 1-2 seconds and you can buy/sell as you please. Yeah exactly...so if someone bought AC stocks in the morning and saw it going down throughout the day, they could sell at the price and minimize their losses instead of waiting till it plummets. Though it is possible with some stocks to essentially hit rock bottom rapidly, if you diversify your investments that should minimize it all going down to 0 Quote Link to comment Share on other sites More sharing options...
w8list Posted June 9, 2020 Report Share Posted June 9, 2020 dollar cost average into the index funds, but downside outweighs upside at the moment. Quote Link to comment Share on other sites More sharing options...
Galaxsci Posted June 10, 2020 Report Share Posted June 10, 2020 6 hours ago, brattatat said: Would it be prudent to invest like 30k of my LOC at the prime -0.25 rate (Scotia) into index funds? Would I be making more money overtime or would the interest end up costing more than the return on investment? If any resident/physician has done this in their time, would be great if I could get some information. It all depends on your time horizon. There are many 5 year periods throughout history where the overall market loses money. There are far fewer 10 year periods and far fewer 15 or 20 year periods (if any). If you're willing to keep that money in the market for the long haul, history suggests that you would average about 7% per year which is better than you're paying on your LOC. But if you panic at a low point or you decide to sell at the end of med school regardless of whether the market is up or down at the time, there's a reasonable chance you'll come out worse than you would have if you'd done nothing, given that you'll be paying interest on the money the whole time. Quote Link to comment Share on other sites More sharing options...
ZBL Posted June 10, 2020 Report Share Posted June 10, 2020 3 hours ago, offmychestplease said: I'm talking about day trading...when you day trade you have the share price update in front of you every 1-2 seconds and you can buy/sell as you please. Probably not the best use of time as a med student, and unlikely to be very successful in this strategy. This is speculating, not investing. MDinCanada and TheSalmonMousse 2 Quote Link to comment Share on other sites More sharing options...
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