Med Student in need of advice.

[4as8]

Hi Guys,

I'm a first time poster, and I apologize if this has been covered else where (I couldn't find a similar situation in the posts).

I am a 28 y/o M about to finish med school in canada in about 1 week. I have a masters as well.
I am fortunate as I purchased a home prior to starting school with some help from my parents. I rent out the other rooms, and as such have been able to carry a strong asset through these years. I have about 30k in the debt which I will be remortgaging the house to pay it off. The house will be fully rented by students and I should see some income from it on top of covering my existing debt (I also worked for two years prior to starting med school so I saved quite a bit living at home during that time).

I also have access to a Line of credit which I have not touched. It is at prime. My thoughts are should I use this for investments (Ie sign on with a bank or group of investors who will take the whole LOC and invest on my behalf? The return should cover the interest).
As for my other costs, I am fortunate that I have a condo in toronto where I will be doing my residency, with mortgage of roughly 1300-1400 a month (including maintenance fees). I do not own a car.
My income from residency will be roughly 3400 a month after taxes. I should hopefully get about 1.5-2k from the house when fully rented (I got very lucky with this property). So a total income a month of roughly 5k.

I will be done residency in 2 years. My gross income will somewhere between 240-300k depending on where/how much I work. This is gross ofcourse. Net will probably be closer to 120-140k. This LOC is only available to me over the next two years. Investing is an important avenue as physicians in canada are not given any pension or benefits. 

So if I do use this LOC for investments, I will get a head start on stocks (which I own none of currently), and will be able to pay off the 250 LOC over 5 years or so at that income.

What are your thoughts. I would love and appreciate any feedback.

Many thanks.

« Last Edit: April 04, 2015, 09:13:58 PM by 4as8 »

[plainjane]

I think this is a bad idea.  Yes, you would be started on your investments earlier, but you'd be very highly leveraged for the next two years.

All of your numbers right now are hypothetical.  You should hopefully get 1.5-2k from the house when fully rented.  But you don't know the costs that might be involved in maintaining it once you aren't living there.  (e.g. will the tenants behave as well?  will you catch the small issues before they become expensive ones? will you have time to manage this during your residency while you're living in another city & exceptionally busy or will you need to hire someone?)

Don't borrow more money than you can afford to lose when you are investing.  In two years, you'll be able to catch up given the amount of cash flow you are anticipating.

[Catbert]

Don't use that LOC to invest.  Too many things can happen to the stock market in the short run.  Wait until you finish your residency and have cash in hand that you can leave in for the long haul.

As an American I'm not very familiar with Canadian financial, ah...stuff.  If you have extra money put it into whatever retirement vehicles are available to you.  Or pay a bit extra on your mortgage if you plan to keep it for the long haul. 

[4as8]

Thanks for the advice plainjane and mary w.