The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Le Barbu on June 15, 2015, 07:49:56 AM
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I didn't know what title would fit this post, let me explain.
My dad sold some real estate and all of his registered accounts are maxed out. The same for my MIL, no debts, good pension plan, not interested in investing etc. They could get some GICs @ 1.25% (0.9% after taxes) meaning they don't keep up with inflation. I offered them both 2% for 2-5 years and here is my plan to use it.
1/3 would be used to repay our mortgage @ 3.49%
1/3 to buy ZCN in my TFSA
1/3 to buy VSC in Mrs Le Barbu TFSA
Interests would be paid in cash once a year (not compounding) and 30 days before the end, we decide of renewal conditions.
This plan top our TFSA to the limit and the lenders are getting 2% net. For us, we save 1.49% net on the mortgage and the 50/50 split of ZCN and VSB in our TFSA, without being crash proof, SHOULD return more than 2%. At least, it is not taxed and if they keep up for many years, our net return will be around 2% for investing other people's money.
For the record, mortgage will be repaid within 4 years (without this plan) RRSPs and RESP are maxed out. No other debts, average MER 0.16%, 5 transactions/year, 100% stock actually (35%Can, 45%US and 20%Int.)
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Sounds like it's a win-win plan and totally something my family would do. It sounds like this is money your dad could lose without major repercussions if something were to go wrong. I find that's the key to loaning money between family members without risking a major rift.
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I think this is more of a family relations decision than a financial decision.