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Would using my LOC for investing affect my OSAP amount?


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I've been considering this same question. Keeping the conversation separate from if you should invest with a LOC, OSAP makes you report your assets, which includes your TFSA and non-tax sheltered accounts. So I think there would be some deductions due to reporting this (though I think there is a max they expect you to contribute?), as there is no line on OSAP to report how much debt you hold. Another factor to consider is how it would impact your potential for financial aid from your school as well (who may or may not consider your debt:asset ratio). So you would have to figure out if the potential return from investing would outpace the potential financial aid/OSAP grant funding. My gut/personal calculations say it probably won't, but everyone has a unique situation which may impact this decision. 

If you were feeling particularly risky (i.e., I don't recommend this), you could theoretically take some LOC money and play with it for the next 6-months or so with short-term trades and try to grow it as much as you can (though with that strategy you'd probably lose a fair portion of it...). You could then pull it out of the market and use it to pay down any outstanding LOC debt you have, effectively making those assets "disappear". I don't think I would do this strategy with an index-fund on this time period, too much potential for a market correction in the short term. 

Edit: I note that you mention capital gains. You would only realize capital gains/losses when you sell your holdings. This would be separate from holding shares of an ETF through the reporting period, which you would report as an asset. I imagine you likely have to report the capital gains to OSAP as income, but I'm unsure here actually. 

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I’m honestly not too sure about OSAP, but I remember seeing something from federal gov website saying that they will stop considering assets or income and instead will assume a baseline expected contributions for all students so it won’t discourage students from working/internships. I think this is from sometime in 2016.

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6 hours ago, CGreens said:

I've been considering this same question. Keeping the conversation separate from if you should invest with a LOC, OSAP makes you report your assets, which includes your TFSA and non-tax sheltered accounts. So I think there would be some deductions due to reporting this (though I think there is a max they expect you to contribute?), as there is no line on OSAP to report how much debt you hold. Another factor to consider is how it would impact your potential for financial aid from your school as well (who may or may not consider your debt:asset ratio). So you would have to figure out if the potential return from investing would outpace the potential financial aid/OSAP grant funding. My gut/personal calculations say it probably won't, but everyone has a unique situation which may impact this decision. 

If you were feeling particularly risky (i.e., I don't recommend this), you could theoretically take some LOC money and play with it for the next 6-months or so with short-term trades and try to grow it as much as you can (though with that strategy you'd probably lose a fair portion of it...). You could then pull it out of the market and use it to pay down any outstanding LOC debt you have, effectively making those assets "disappear". I don't think I would do this strategy with an index-fund on this time period, too much potential for a market correction in the short term. 

Edit: I note that you mention capital gains. You would only realize capital gains/losses when you sell your holdings. This would be separate from holding shares of an ETF through the reporting period, which you would report as an asset. I imagine you likely have to report the capital gains to OSAP as income, but I'm unsure here actually. 

yes this in my understanding as well. Also since most people would be doing most of this within a TFSA then you won't have tax implications for the most part (in theory they can come after you if you are doing too many short trades). It would never be considered income but is an asset. If you are investing more than your TFSA amounts you really are starting to red line things (leveraged investing without income is messy business - particularly with the market at all time highs. That doesn't mean it cannot go up further, but the higher it is the lower expected returns have to be - that is just math ha). 

 

 

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