I'm looking at using leveraging for investment. I've decided that I will take out a line of credit as a separate loan against my home, the idea is to put the money into my current portfolio of ETFS and LICS. Currently my dividends are completely reinvested through DRIP.
- Keep reinvesting all dividends through DRIP, really taking advantage of compound interest over the long term.
- Pay dividends into loan.
- Is it more tax efficient to pay the dividends back into the loan?
- If it's more effective tax wise to direct dividends towards the loan. Would the compounding effect of reinvesting the dividends over time outweigh the tax efficiency benefit of paying the dividends into the loan?