Q. With the volatility in the stock market, what do you think of the strategy of selling some of my investments and using them to pay down my mortgage?
Kerri, Chelsea QC
A. I’m a big fan of paying down your mortgage and generally reducing nondeductible debt as a key part of your financial planning strategy.
It’s obviously hard for me to provide specific recommendations without knowing more about your situation.
Factors that must be considered include:
Tax implications: would you be cashing out investments from your RRSP or OPEN account, and would you be triggering any capital gains? Alternatively, are there any capital gains or losses being carried forward that can be applied against this?
Fees: what would it cost you to access these funds, including redemption fees, deferred sales charges etc.?
Market value: Are you cashing out the investments when the portfolio has dropped substantially, thereby locking in your losses?
And lastly, perhaps it makes sense to consider the original objective of the investment that you are considering cashing in. Was this a long term investment and except for current market performance, do all other conditions still apply?
I would recommend that you meet with your advisor and discuss your situation considering the above factors. Alternatively, if you are managing this yourself or feel that you are dealing with a broker who doesn’t provide much in the way of financial and tax planning, consider hiring an independent certified financial planner (CFP) for a limited engagement to evaluate your options.
This article provides general information and does not constitute financial or other professional advice. Seek independent advice before implementing any of the strategies discussed.
Imran Syed, BA CFP CFSB TEP is an independent, Fee Only Certified Financial Planner and can be reached at www.feebasedadvisor.ca. Please send any home related, financial planning questions to him by email at homes@ottawacitizen.com
