Jump to content
DABMAN

Investing PSLOC short term vs long term

Recommended Posts

Hi everyone,

Sorry if this question has been asked already, from some of the posts Ive read I havent seen it specifically answered. Im still a 0L but I found the topic of investing the psloc very interesting.

 

So assuming you can use the entirety of the psloc (For maximum investing potential?? I personally will definitely need most of it) my question is what are the pros and cons to maxing it out per year (from what i understand you are allowed to take out only a certain amount per year) and investing it all beginning right from 1L vs waiting until 3L to take it all out and investing it (besides the obvious greater risk you take on investing it early)?

I would love to hear any personal experiences and what you invested into (i was personally just planning to put it in the new tangerine etf portfolios, im a noob at investing)

Thanks everyone and happy new year!

Share this post


Link to post
Share on other sites

Before you do anything I would strongly recommend you go over the fine print of your PSLOC agreement with your financial institution to ensure that there aren't any terms that prohibit you from withdrawing funds for investment purposes or purposes other than paying for tuition and fees. There are multiple threads on r/PersonalFinanceCanada about using student lines of credit to invest, where I saw someone say that they know of a person whose line of credit access was revoked when the bank found out they've been using the money to invest. Obviously I don't know if that's a true story or not, but I don't think it's totally outside the realm of possibility for a borrower to have their access to credit revoked if the lender found out (through whatever means) that they had used borrowed funds in ways that breach the agreement. In any case, I think r/PersonalFinanceCanada is probably a much better place to browse and dig for info and advice on this subject matter than ls.ca

  • Like 1

Share this post


Link to post
Share on other sites

Whether your agreement allows you to or not, the cons of investing your LOC are that you need to beat the interest rate (usually prime or prime+0.5) for it to be worthwhile and you may not have easy access to it if its tied up in investments. With that being said, I know students who put it all in stocks, made a down payment on a house, bought cars, etc. Its up to you to decide whether it's worth it in your circumstance.

Before it becomes a loan, I'll probably take a portion of mine to make an emergency fund in a high-interest savings account. I may pay a bit more in interest than I'm getting, but the peace of mind knowing it's there is worth it to me. I am extremely risk averse, though. I'm sure most financial pros would not recommend this. 

  • Like 1

Share this post


Link to post
Share on other sites

Do not do this until you graduate and have a post articling job lined up. 
 

The risk of the market shitting the bed and you not being able to afford school is to high and not worth the small amount of money you may make in exchange. 
 

You would be picking up pennies in front of a steamroller. 
 

After graduating and securing a post articling job is a different issue and comes down to risk preferences.

  • Like 1

Share this post


Link to post
Share on other sites
6 minutes ago, Luckycharm said:

Only an idiot will think of something like that. 

Sorry I was just trying to explore all my options in reducing law school debt and this topic seemed to come up a lot on the student financial support section. 

Share this post


Link to post
Share on other sites

The only situation where I think that this may make sense is if someone made a lot of money in their professional career in the year that they start law school and they put it into an RRSP to reduce their tax obligation with a plan to withdraw it in the future for education or even the home buyers plan. The amount of money you would get back on taxes may outweigh the interest paid. 

That said, I think that this only applies to a handful of people who are leaving substantial careers and going into law school. Those that probably will not get full student loans due to their income. This is a rarity. This probably only applies to 1% of law students. So don't do it. Even if you are on the lower end of the income scale. Don't do it. There is no benefit to you on the lower end of the income scale and you use up RRSP room instead of a higher income earning year. 

  • Like 1

Share this post


Link to post
Share on other sites

The better way to do this is to get a part time job and invest that money rather than borrowing from your LOC to invest. 

 Please don't try to pick single stocks. Find a fund or funds that suits your investing philosophy

  • Like 1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.


  • Recent Posts

    • Former adcomm here. Assuming you have a smattering of A's to balance out your lower courses, that 175  LSAT says you'll likely get in somewhere.  Lots of schools focus on your L2 GPA, so what's that like for you? Count backwards from your most recent course until you've gotten at least 10 full credits. You can't split up school years/summers. So if your last course 10 lands on say something you took in the summer, you continue counting and include all the courses you took in the fall/winter semester leading up. If the course lands in the winter, you  include all the courses from the fall as well.  If you have a handful of courses dragging you down, you can also look at schools that drop your lowest, although I don't know of any in Ontario that calculate GPA that way. Oh, and no one will care that you took 8 years to finish your undergrad if you have a good explanation. And yours is a pretty good one. Not everyone can do school full time. Schools know this.
    • Title is self-explanatory. Has anyone heard back yet or know of anyone who has?
    • I think it's safe to say that it may be required for students to be physically at the firm some days of the week. 
    • Are firms expecting students to be physically in Toronto for the summer if work will be remote? 
    • OP should apply to some schools outside of Ontario as well. https://lawstudents.ca/forums/profile/31659-fatphil/ https://lawstudents.ca/forums/topic/62270-chances-lsat-172-cgpa-275-3-lors-one-from-trustee-of-annual-prize-at-a-law-school/?tab=comments#comment-835140

×
×
  • Create New...