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OnlyResident

Using PSLOC for Investments

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Does anybody have any experience in investing using PSLOC?

Is it allowed? 

Is it a dumb idea?

Looking at indexes/some stocks/maybe real estate. 

 

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Personally used this funding to invest in a mutual fund. made a significant amount over a few years (not disclosing for personal reason). its a risk but the reward is there if you are smart with it. I also went with riskier investments (stocks) and the rewards were way higher, but the fall is there too. you just have to make sure that if you lost all the money you did invest, would you be okay? if so, go for it. 

 

if you are investing short term and want no risk, GIC is the best thing. also real estate is relatively low risk in GTA, can't speak for other areas of Canada. you need way more capital than your funding for real estate though, it probably won't be enough for a down payment on good real estate 

Edited by jatthopefullawyer

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9 minutes ago, jatthopefullawyer said:

Personally used this funding to invest in a mutual fund. made a significant amount over 4 years (not disclosing for personal reason). its a risk but the reward is there if you are smart with it. I also went with riskier investments (stocks) and the rewards were way higher, but the fall is there too. you just have to make sure that if you lost all the money you did invest, would you be okay? if so, go for it. 

How did you secure a PSLOC as an undergrad? 

Unless you already have the funds to pay for law school on your own, don't do this. 

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7 minutes ago, Tagger said:

How did you secure a PSLOC as an undergrad? 

Unless you already have the funds to pay for law school on your own, don't do this. 

was referring to the other type of funding you get from big brother and I have the funds to pay for law school so no worries there. I definitely wouldn't suggest taking out 100k and investing it while you pay interest. only invest if it is interest free. 

Edited by jatthopefullawyer

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Ok, pretty concerned that there are serious ethical and potentially legal issues in doing this.

Can anyone who has more recently got a PLSOC chime in? Am I wrong?

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43 minutes ago, OnlyResident said:

Does anybody have any experience in investing using PSLOC?

Is it allowed? 

Is it a dumb idea?

Looking at indexes/some stocks/maybe real estate. 

 

 

40 minutes ago, jatthopefullawyer said:

Personally used this funding to invest in a mutual fund. made a significant amount over a few years (not disclosing for personal reason). its a risk but the reward is there if you are smart with it. I also went with riskier investments (stocks) and the rewards were way higher, but the fall is there too. you just have to make sure that if you lost all the money you did invest, would you be okay? if so, go for it. 

 

if you are investing short term and want no risk, GIC is the best thing. also real estate is relatively low risk in GTA, can't speak for other areas of Canada. you need way more capital than your funding for real estate though, it probably won't be enough for a down payment on good real estate 

 

22 minutes ago, jatthopefullawyer said:

was referring to the other type of funding you get from big brother and I have the funds to pay for law school so no worries there. I definitely wouldn't suggest taking out 100k and investing it while you pay interest. only invest if it is interest free. 

 

jatthopefull: Perhaps you should figure out what a "PSLOC" is before you chime-in and say things like "Personally used this funding to invest...". 

Not saying stupid, negligent shit will be an essential practice if you do ever become a lawyer. 

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12 minutes ago, QuincyWagstaff said:

jatthopefull: Perhaps you should figure out what a "PSLOC" is before you chime-in and say things like "Personally used this funding to invest...". 

Not saying stupid, negligent shit will be an essential practice if you do ever become a lawyer. 

yeah totally agree. stupid on my part. you really have to be exact with what you say when you are a lawyer. that doesn't mean there aren't dumb lawyers out there. however, the type of lawyer I aspire to be is definitely going to need to be what you are describing to a tee 

regardless using a line of credit is dumb to invest with unless you really know what you are doing (if you did you probably would not be on this forum). the risk is greater than the reward most of the time 

Edited by jatthopefullawyer
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My question is: are you actually permitted per the terms of student a line of credit to invest it - at all?

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Regardless of whether it’s allowed/legal, the prime interest rate is what, 4.95%? You would have to have at least a 5% annual return to just break even... sounds like a losing battle to me 

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1 hour ago, jatthopefullawyer said:

Personally used this funding to invest in a mutual fund. made a significant amount over a few years (not disclosing for personal reason). its a risk but the reward is there if you are smart with it. I also went with riskier investments (stocks) and the rewards were way higher, but the fall is there too. you just have to make sure that if you lost all the money you did invest, would you be okay? if so, go for it. 

 

if you are investing short term and want no risk, GIC is the best thing. also real estate is relatively low risk in GTA, can't speak for other areas of Canada. you need way more capital than your funding for real estate though, it probably won't be enough for a down payment on good real estate 

Do you have PSLOC? I thought you are still waiting for acceptance....

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1 minute ago, Luckycharm said:

Do you have PSLOC? I thought you are still waiting for acceptance....

Like Quincy pointed out, I was talking about my undergrad funding so ignore my comments. sorry about that 

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21 minutes ago, Lawstudent97 said:

Regardless of whether it’s allowed/legal, the prime interest rate is what, 4.95%? You would have to have at least a 5% annual return to just break even... sounds like a losing battle to me 

I mean if you went with a risky mutual fund portfolio last year you could've easily gotten 15%, but it isn't guaranteed. you could lose money too but yeah good advice is to stay away from losing money you don't have 

Edited by jatthopefullawyer
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5 minutes ago, jatthopefullawyer said:

Like Quincy pointed out, I was talking about my undergrad funding so ignore my comments. sorry about that 

That is Ok.

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7 hours ago, flyingfish said:

I used to work for a bank. You are not allowed to do this.

Thank you for the clarification. I guess some people still do it, as the probability of getting caught is very small. You’re not allowed to day trade with your tfsa either, but many people do this. Most people go under the radar, save a handful who manage to get their tfsa over one mil or something (which is truly a rare case).

 

Edited by levin
removed name calling of people who post on autoadmit/stockhouse/wsb lest anyone here be a regular there

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14 hours ago, erinl2 said:

Calling @WannaBeBanker

Haha so the short answer is that I don't see anything in the credit agreement that specifically says you have to use these funds for one thing or another, but it may be implied. The closest thing I can see that would address this is "We will not be required to make any advances to you particularly if we determine that you are not in compliance with this agreement". It may be implied there that this is a student LOC and it is to be used for expenses relating to schooling etc. It's a grey area, and you guys can read through the credit agreements that you signed and the booklets that came with them for all the legalese behind them, but that was the closest thing that I could find.

On to the next part - I definitely would not recommend for anyone to use these LOCs to leverage any sort of investment. Anything worth investing in would come with some degree of risk attached to it. Unless you are fully confident that if all goes south you'd still have a backup plan to be able to afford to lose most/all of the money you invested, and keep up the payments on the LOC, it would be a bad idea. Don't bank on "oh I'll have a job by then and be making money" either, because if stock markets go south so does the job market. The stock markets have been going strong for over 10 years now, and a market correction can happen at any given time. Same goes for real estate, some have pointed out that real estate in the GTA is a safe bet but is it really? And what kind of real estate can you get into in the GTA with a $100,000-150,000 LOC? You guys are going to be in school for ~4 years, if you decide to go ahead and take a chance with leveraging your LOC and something bad happens, that is not a lot of time to mitigate risk/recover if things suddenly go south.

You'll probably hear lots of stories of person A who used their LOC to invest into this stock or that fund and it worked out great, or person B who figured a way to buy a piece of property in 2013 and sold it for a great profit in 2017. But these are all stories of things happening when times are good, they are just a snapshot in time. Things have been good for a really long time now, and if you look at the history of the markets you can probably say we're overdue for the opposite to happen. That's not to say that it will or it wont, but you don't want to be that guy/girl who gets caught when things go south unless you have a wealthy family or other means to ensure you'll be ok going forward. All hypothetically speaking but just think of it - if we come to a point where there is a recession/market crash, would you be comfortable knowing you used $100,000 to invest into something that is now worth only $50,000 and your job prospects coming out of law school are now looking a lot worse thanks to the economy taking a downturn, people are being laid off and let go everywhere. You still owe that money and have to pay it back, and your employment opportunities now don't look so rosy anymore either. I would hope you have a trust fund somewhere to bail you out of this mess.

Anyways, bottom line is I'd say it's bad news for most people.

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My partner has a TD PSLOC, and was explicitly told this was prohibited.

However I haven't actually seen the paperwork, as what my partner actually reported was the verbal explanation by the advisor, and not anything they actually saw in the fine print. So it's possible it was just really strong advice, and not an actual clause in the agreement.

Either way, as better explained above - really risky!

-GM

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